According to the Zhongtong Financial APP, Huatai Securities released research reports stating that housing prices continued to rise in April, approaching historical highs. The current US mortgage interest rates are still running at high levels. The May Fed meeting minutes showed that a rate cut may need to wait longer. Huatai Securities believes that the high and unchanged interest rates currently are not conducive to the release of US housing demand, and the existing home sales signing index, which represents the forward-looking indicators, weakened in April. Therefore, the short-term growth of US housing sales may be uncertain.

The following are core points:

In April, the US housing market showed a decline in sales volume but an increase in price, and the short-term sales growth prospects are uncertain.

In April, both new and existing home sales in the United States declined on both a year-on-year and month-on-month basis. On the supply side, although the overall inventory has increased, existing home inventory remains tight. Housing prices continued to rise in April, approaching historical highs. The current US mortgage interest rates are still running at high levels. The May Fed meeting minutes showed that a rate cut may need to wait longer. We believe that the high and unchanged interest rates currently are not conducive to the release of US housing demand, and the existing home sales signing index, which represents the forward-looking indicators, weakened in April. Therefore, the short-term growth of US housing sales may be uncertain.

Both new and existing home sales declined in April, while the total inventory increased slightly.

In April, the total US housing sales volume was 398,000 units, a decrease of 2.7% year-on-year and 2.3% month-on-month. Among them, new home sales were 53,000 units, a year-on-year decrease of 7.7%, which was 11.6 percentage points lower than in March and the first negative growth since last April, and a 4.7% month-on-month decrease. Existing home sales were 345,000 units, a year-on-year decrease of 1.9%, which was 1.1 percentage points lower than in March, and a 1.9% month-on-month decrease, down for two consecutive months month-on-month. As of the end of April, the inventory of new and existing homes was 470,000 and 1.21 million units, respectively, an increase of 10% and 16% year-on-year and 3% and 9% month-on-month. The months of supply available for new and existing home sales increased from 7.4 and 3.2 to 8.5 and 3.5, respectively, which are at the 86th and 17th percentile values since 2000. Although total inventory increased slightly, existing home inventory remains tight.

The median prices of new and existing homes are approaching historical highs, which may weaken the demand for buying homes.

In April, the median price of new home sales in the United States was US$434,000 per unit, a month-on-month decrease of 1.4% and a year-on-year increase of 3.9%, with a growth rate of 3.8 percentage point than in March. The median price of existing home sales was US$408,000 per unit, a month-on-month increase of 3.7% and a year-on-year increase of 5.7%, with a growth rate of 1.0 percentage point than in March. The median prices of new and existing homes are at the 97th and 99th percentile values since 2000, respectively, approaching historical highs. As of the end of March, the US housing purchase power index was 101.1, a 2.03% month-on-month decrease, ranking at the 4.4 percentile value since 2000. In April, the existing home sales signing index (annualized) was 72.3, a year-on-year and month-on-month decrease of 7.4% and 7.7%, respectively. We believe that due to the high interest rates, the affordability of current housing in the United States is low, and this may weaken the willingness to buy a house in the short term.

Mortgage loan rates have rebounded slightly and will remain at high levels in the short term.

In April, the average 30-year mortgage loan rate in the United States was 6.99%, a month-on-month increase of 0.17 basis points, approaching the 91.1 percentile value since 2000 and running at high levels. In April, the core CPI adjusted for seasonal factors in the United States increased by 3.6% year-on-year, which is consistent with the Bloomberg consensus forecast. The Fed announced at the May FOMC that the target range for federal funds rate was still 5.25% to 5.50%. Powell also indicated that it is not appropriate to relax monetary policy until the Fed has confidence that inflation can drop to 2%. This indicates that the possibility of the Fed opening a channel of rate cut in the near future is small. In the short term, the US mortgage loan rate will remain at high levels.

Risk warning: Fed policy tightening exceeds expectations, and the recovery of the US housing market is weaker than expected.