US New Home Sales Plunge To A 17 Year Low, Dollar Traders Are Numb To The Data

[DailyFx]

With the US housing market already deep into its worst recession in generations, it seems new lows in sales activity is generating less and less of a reaction from the dollar. Indeed, traders seem to have priced in an indefinite decline in this battered component of growth, as a massive 11.5 percent drop in new home sales to a fresh 17-year low would only set the currency back for a few minutes. However, while the market's response was muted, the data itself was certainly disappointing. The contraction was the biggest since last November's record, leading the annualized pace of sales to a 460,000 pace - a dramatic shift from the 1.04 million clip reported just two years ago. On the other hand, the components of the Commerce Department report suggest the necessary changes are being made to eventually recharge the market when demand is found. Homes for sale fell for yet another month to 408,000 (from 427,000 last month) as construction activity cools and inventory is worked off. More important to meeting an equilibrium for demand, the average preice fell yet again to $221,900. While next month's reading will almost certainly be depressed by the recent financial crisis, the market looks as if it may improve further out - that is if consumers aren't put into a worse position by a recession.