There are three key US housing reports that traders look at to evaluate the strength of the housing market. The first report is housing starts which is an indicator of supply in the housing market. The second report is existing home sales which is a survey that shows the level of sales of existing homes. The third is new home sales. Existing home sales and new home sales are indicators of demand for housing. US July existing home sales report will be released on Thursday August 21st at 8:00 AM EST.  The existing home sales report is published by the National Association of Realtors (NAR.)

US housing market shows signs of improvement/gradual recovery expected
US housing starts unexpectedly declined by 1% in July. The decline reflected a drop in construction for multifamily homes. The drop was partly offset by a rise in new construction of single-family homes. The decline in housing starts may revive concern about the outlook for the US housing market if existing home sales and new home sales also remain weak. The housing market crash was a major cause of the financial crisis and recession. US housing data is looked at to gauge the strength of the housing market and the timing of the end of the US recession. Housing data may also be used to help measure the potential strength of the US recovery. Stability in the housing market is key to US economic recovery. Improving sales and rising prices would help improve bank balance sheets. Recovery in the housing sector would also help to boost consumer confidence and encourage spending.

June existing home sales rise
Existing home sales rose for the fourth consecutive month in June by 3.6% to an annual rate of 4.89 mln units compared to 4.72 mln units in May. This marked the highest level of existing home sales since last October. On a year-over-year basis, existing home sales have been declining since January 2006 reaching a low of -23.2% in February of 2008. June existing home sales dropped 2.9% year-over-year marking the smallest decline since May of 2006. The median sales price for existing home rose from 173k in May from 180k in June. Existing home sale prices are 15.4% lower on a year-over-year basis when the median price was 215k. The inventory of unsold homes fell from a 9.8 month supply to 9.4 months. Despite the drop in June, the inventory of unsold homes remains almost double the historical average. According to the NAR's chief economist Yun the increase in existing home sales occurred in all major you regions and he expects gradual uptrend in sales to continue due to tax credit incentives and historically high affordability. The risk of this outlook is the continued large inventory of existing homes and ongoing foreclosures. US foreclosures rose by a record 7% in July. The continued rise in unemployment remains a major headwind for the US housing market as well.

Existing home sales are showing signs of recovery but the recovery is from extreme low levels. The size of the recovery in existing home sales remains small but likely continued in July. July existing home sales are expected to rise to 1% to 4.99 mln slightly better than the 4.89 mln reading in June. The existing home sales report will be looked at for clues to US recovery outlook. The impact of the report will depend on whether the report fuels investor risk appetite or demand for safety. As more analysts conclude that the US recession is ending investors will be looking to existing home sales report for confirmation these analysts are correct.