US Existing Home Sales Rebound With A Tentative 5-Month High

[DailyFx]

The National Association of Realtors' existing home sales report rebounded more than expected through July; but the month-over-month improvement hardly confirms the bottom of the United States' worst housing recession since the Great Depression. According to the group's data, sales of previously owned homes rose 3.1 percent last month to beat expectations of a 1.0 percent expected improvement and retrace more than the 2.8 percent decline from the previous period. From a purely historical standpoint, this data is mixed. While the change was the most bullish in 17 months, the overall level is within a range whose base is at a 10-year low (though this particular month's reading happens to be at a 5-month high). Fundamentally, this data generates cautious optimism at best. Details show the average sales price for a home fell 7.1 percent year over year all while inventories rose to a new record. What's more, the outlook is still unfavorable. American consumers still holding out for lower prices as the cost of borrowing money rises to new multi-year highs. And, until inventories for new and existing homes is worked off, there will be little demand for new construction. Just this past week, we have seen housing starts drop to a 17-year low; and with the economy slowing, the statistics will only worsen until demand rises above the level for cheaper existing residences. Despite all this sentiment floating around, the dollar has been relatively uneffected by the data as fundamental traders seem to have long priced in the primary impact of a housing recession on the currency. However, if consumer spending breaks, the housing data may take on a new task as an accelerant to declines.