U.S. Home Sales Statistics Are Out. Can Bad News Be Good?

It has been a tough week for the U.S. real estate industry. Will today bring any relief after yesterday’s dreadful release of the New Home Sales metrics?

July’s New And Existing Home Sales Took A Hit

The Report

Wednesday’s U.S. New Home Sales report grossly underperformed analyst expectations. The month-over-month rate of change came in at -9.4%, under the projected 0.3%.

Today’s numbers are a bit more tempered:

                                                                                    Previous   Projected   Actual

• Existing Home Sales (MoM, July)                      5.51M            5.57M    5.44M

• Existing Home Sales Change (MoM, July)         -2.0%             0.9%      -1.3%

Not a whole lot of surprise in these statistics. While the numbers certainly don’t impress, they are not hugely negative.

Can Bad News Actually Be Good?

Today’s report is another indication that the U.S. economy may be slowing down. Home values are a lynchpin in the American economic system. Typically, when sales are robust all is well. When home sales slow down, there is change on the horizon.

As of now, U.S. equities indices seem to be taking the news in stride. The DJIA and S&P 500 are both near flat. The dollar futures index also did not see much action on the release, trading near even.

It looks like the markets are discounting the housing data and viewing it as a potential positive. The lagging performance of the sector may cause the FED to reconsider the proposed rate hikes slated for later this year.

If that is the case, look for a weakening dollar and continued strength in U.S. equities for the intermediate term.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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