Home sales

U.S. New Home Sales (August) Rally

Posted Wednesday, September 25, 2019 by
Shain Vernier • 1 min read

The American real estate market got a dose of good news today, with a strong New Home Sales release for August. While the figures were impressive, MBA Mortgage Applications from September 20th lagged badly. A dovish FED and strong economic growth cycle typically drive all facets of real estate higher ― what gives?

New Home Sales Up, Mortgage Applications Down

Below is a quick look at the highlights of today’s U.S. real estate metrics:

Event                                                                         Actual       Projected     Previous

MBA Mortgage Applications (Sept. 20)                 -10.1%            NA               -0.1%

New Home Sales (MoM, August)                           0.713M         0.660M        0.666M

New Home Sales Change (MoM, August)                7.1%              3.5%            -8.6%

As you can see from the figures above, New Home Sales (August) posted a robust 7.1% gain. This is a sizeable improvement over July and certainly reflects the 31 July FED rate cut. However, MBA Mortgage Applications fell off by 10% from the previous release. While this figure is not a primary market mover, it does signal that a contraction in the U.S. real estate sector is very likely on the way.

USD Index On The Bull

While the New Home Sales figures have a modest impact on the USD Index, they certainly haven’t hurt today’s rally. Rates of December USD Index futures are back in the neighborhood of 98.500 and pushing intraday highs.

December USD Index Futures (DX), Daily Chart New Homes Sales
December USD Index Futures (DX), Daily Chart

Overview: At the moment, the December USD Index is in a bit of a technical no man’s land. Rates are well above support and driving higher. Perhaps the only level worth watching is the spike and yearly high at 98.900. If we see a test of this area, then a potential late-week shorting opportunity may set up following Thursday’s Q2 GDP report.

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