With markets already on the front foot on optimism about Greece's debt ahead of a key confidence vote later, some better than expected US housing figures have added to the positive mood.
US existing home sales fell 3.8% to 4.81m in May, but this was better than the 5.9% drop which economists had been forecasting. So Wall Street is up nearly 60 points while the FTSE 100 has added 61.42 points to 5754.81. Teunis Brosens at ING said:
Sales of existing homes fell 3.8% month on month in May, from a downwardly revised 5m in April. The most important question is whether this is a temporary dip or the beginning of a more protracted weakening of sales activity. There are some indications of the former. Sales activity was hampered by the severe April storms in southern states, leading to fewer contracts signed in May. The late Easter may also have depressed sales. Early indications suggest that May saw a rebound of pending sales, which would mean that a recovery of existing home sales in June is underway.
Low prices and mortgage rates may make housing look affordable, but on the buyer's side it is really the labour market we are waiting for. As more people find their way back to work, demand for homes should start to strengthen in the second half of the year. But progress will be slow. The housing market will continue to lag, rather than lead the recovery.
