US Existing Home Sales

...is missing from the calendar. Just thought I would bring that up since it could impact the market quite a bit.

1400 - U.S. EXISTING HOME SALES FOR AUGUST
National Association of Realtors (NAR) releases
existing home sales for August. Economists in a Reuters
survey forecast a median 6.18 million annualized unit
total versus 6.33 million annualized units in July.

Barclays Capital say: 'Weakness in a broad base of housing indicators suggests that sales of existing homes likely fell further last month, and the recent declines in mortgage rates likely happened too late to have much of a positive impact on August sales.'

Pardon the ignorance, from my understanding, "New Home Sales" are sales derived from newly constructed houses while "Existing Home Sales" refers to old houses. Is this correct?

So, what is the significants of "Existing Home sales"?
Let say Person A sold his house to Person B,
Person B sold this house to Person C,
.
.
.
Person Y sold this same house to Person Z

Umm... I dont seem to see any "new inputs"... its only circulating in the market passing from one hand to another..

Hi BurgerKing,

You are right that existing home sales are not new inputs, but in terms of discerning the trend in the housing market this number is interesting because some 85% of total home sales comprise of the existing stock. Housing wealth in turn, is a vital element in the overall wealth, and if houses are not selling, that could indicator wider softeness in the economy.

http://www.nasdaq.com/econoday/repor...y/08/chart.gif

Also, Econoday (who I nabbed the chart below from), note that home sales tend to generate lots of additional expenditure (fridges etc etc).

Ever the optimist I see 30-year mortgage rates are some 50bps cheaper than 3 months ago. This could provide a modest cushion to the market in future months data.

Hmmm... perhaps there is reason why US needs to look at this piece of indicator indeed. Its not about production, but how the economy moves.

@abobtrader,

since you are on the trade floor, what is the market chatter on the current state of USD? are people SERIOUSLY looking at today's Existing Home Sales number as a confirmation of bearish USD?

Very new, I am. It's been a pleasure and a privilege to learn so much from you guys. So here I am making my first attempt at interacting in a "give-back" way. I see Existing home sales as an indication of a healthy market if the numbers are higher because people are buying, getting Mortgages etc., versus a depressed market if existing homes sales are low, like now!

I saw a stat yesterday that said that foreclosures are up 53%!!! in august versus 2005!


Realm
"Applied Knowledge is Power!"

Sorry BurgerKing, not on the trading floor any more. Hence my presence here!

I would say re the housing mkt in the US, it is seen as vital in discerning the overall strength of the economy and seems to have moved to a more central position on the FX radar. When this was the case for the UK, all the housing market indicators seemed to have an impact, but the mkt is now less concerned with UK house prices and so the importance of the indicators has receded. For the time being I'd be watching US home starts, existing and new home sales and house prices.

Hi Realm, according to the general media, property foreclosures have been more modest: http://www.msnbc.msn.com/id/14817866/ . Perhaps this large increase was in a particular state?

I just done a historic chart research on Existing Home Sales (unfortunately dont have time to post them all here for today). I noticed that:

1. If the currency pair has made movementrs in the last 15 minutes coming into the news time, the response will be poor. ie, priced in. (jan, may, jun, aug)

2. if the currency pair is very silent (Feb, Mar, Apr, jul), the move will be gradual, slow and perfect for novice to enter even with a slow broker. (I hope it will be silent later...)

3. BUT if the 1st minute move is very strong, hmm... we wont be able to enter anymore.

This will be my 1st Existing Home Sales newstrade. I hope we get good gradual move. BUT is this possible considering the current USD atmosphere? I bet a lot of people are watching this number as confirmation for a bad USD (which will cause USD to loose big time grounds).... Housing, as many economist have said to dropped very badly. BUT what we are going to trade later is not the actual number but the deviation to the consensus.. which makes it dificult to predict.. x(

Nice quick analysis BurgerKing. I've got no idea about immediate impacts but I always look at news for my medium term view. HSBC's daily FX Edge note says:

'In the US, existing home sales (10:00 ET) are expected to fall for the fifth month running in August, with the market expecting a decline to 6.20mn – the lowest level since January 2004. The market remains very sensitive to the housing data and any number under 6M units will see bonds rally and the dollar sell off in a material fashion.'

A material fashion ... I love the verbiage!

this housing data should be fairly important today, another big decline will be the nail in the coffin for the US housing market.

i think the data will be bad, but i may be biased because im trying to buy a house in the next 12 months:

The stats will be bad, buy the Euro/USD...

Agreed. Hard to go wrong shorting USD across the board.

Just information; not a recommendation. (oh come on MM!!)

I am the nail that sticks out, and will likley get hammered.

EUR/USD is down today and is bouncing around 1.2760. Bloomberg has stories of bullish bond stories, and Reuters has stories with titles like (US housing slump may prompt Fed to cut rates). How much more USD bearish can the mkt get I wonder?
If the IMM positions hadn't shown a significant trimming of USD bearish trades I would have been more confident with my modestly USD bullish view. As it is, its all just conjecture.

well i expect housing data to be bad, but that doesnt mean im ready to go long EURUSD. because everyone (other than abo: ) is expecting bad news! that could very well cause the dollar to strengthen on the release. the only time i like to trade based on my prediction is when my prediction is opposite that of the overall market. i like to see traders get surprised, because that causes the big moves.

Hmmm, not so sure anymore...
I will be shorting any spike towards 9070/80..

Sept 25 (Reuters) - The following is data on U.S. existing
home sales from the National Association of Realtors
(seasonally adjusted annual rates):

Units Sold (in mlns) Aug July (Prev) Aug'05
Total Existing Homes 6.300 6.330 6.330 7.210
Single Family 5.510 5.510 5.510 6.280
Condos/Co-ops 0.793 0.822 0.818 0.928

Units Sold, Pct Change Aug July (Prev) Aug06/05
Total Existing Homes -0.5 -4.1 -4.1 -12.6
Single Family UNCH -5.0 -5.0 -12.3
Condos/Co-ops -3.5 3.3 2.8 -14.5

TOTAL EXISTING HOMES:
Aug July (Prev) Aug'05
Median Price (1,000s) 225.0 230.0 230.0 229.0
Note--Median sales price is the midpoint where half the
homes sold for more and half for less.

Aug July (Prev) Aug'05
Units Available (mlns) 3.918 3.861 3.856 2.841
Months' Worth of Supply 7.5 7.3 7.3 4.7

Units Sold By Region, seasonally adjusted, in 1,000s:
Aug July (Prev) Aug'05
Northeast 1,070.0 1,050.0 1,050.0 1,210.0
Midwest 1,440.0 1,430.0 1,430.0 1,620.0
South 2,510.0 2,530.0 2,530.0 2,710.0
West 1,290.0 1,320.0 1,320.0 1,670.0

Median Price By Region, unadjusted, in 1,000s of dollars:
Aug July (Prev) Aug'05
Northeast 271.0 276.0 276.0 282.0
Midwest 176.0 177.0 178.0 178.0
South 184.0 193.0 192.0 189.0
West 345.0 347.0 348.0 344.0

Aug July (Prev) Aug'05
Avg 30-Year Rate (Pct) 6.52 6.76 6.76 5.82
Avg. rate is the Freddie Mac average commitment rate for
30-year fixed-rate mortgages.

FORECAST:
Reuters survey of U.S. economists forecast:
U.S. Aug existing home sales at 6.18 mln unit rate

----
on second thoughts my cut and paste efforts are not so great!

usd gained strength as the result was better than consensus.

however, the number is still absolutely USD bad... so I went buying when it dipped.

LOL! i forgot to increase the TP.. it exited with +14

PS. IBFX increased the spread to 9 pips... surely straddles will be stopped out immediately with this.. Hmmm... seems like IBFX has followed the OANDA cue. To all using iBFX news traders, be carefull from now on...

The data wasn't too bad after all. instead of the expectation of less than -1%, the figure coame out just about -0.5%. Hence both EUR/USD and GBP/USD drop about 20 pips when the data came out

Right on the nose... I just sold one of mine. So, maybe it is me that caused the problem... LOL, Scott




ECONOMIC REPORT
Existing-home prices fall for 1st time in 11 years



By MarketWatch Rex Nutting
Last Update: 10:03 AM ET Sep 25, 2006





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WASHINGTON (MarketWatch) - Median sales prices of existing homes fell from year-ago levels in August for the first time in 11 years and just the sixth time in the past 38 years, the National Association of Realtors said Monday.
Sales of existing homes fell 0.5% in August to a seasonally adjusted annual rate of 6.30 million, the industry group said.
Sales have fallen five months in a row and in nine of the past 12 months. Sales are down 12.6% in the past year. It's the lowest sales pace since January 2004.
The median price of an existing home fell 1.7% year-over-year to $225,000. It's the first time since April 1995 that median prices have fallen on a year-over-year basis. It's the second largest decline in the 30-year history of the realtors' survey, exceeded only by a 2.1% drop in November 1990.
The price correction is a welcome development," said David Lereah, chief economists for the realtors group.
"The price drop has stopped the bleeding," Lereah said. "Sales have hit bottom," he said. "Sellers are finally getting it."
"I am confident the housing sector is picking up," Lereah said in a press conference. Lereah expects prices to continue to drop for the rest of the year, which would keep sales from falling further.
"If that's so, we'll have achieved a soft landing," Lereah said.
Economists were expecting sales to decline to about 6.18 million in August, according to a survey conducted by MarketWatch.
Inventories of unsold homes rose to 3.92 million, a 7.5-month supply at the August sales pace, the most since April 1993.
Sale of single family homes were unchanged at a 5.51 million annual pace. Condo sales fell 3.5% to 793,000.
Sales fell 2.3% in the West and 0.8% in the South. Sales rose 1.9% in the Northeast and 0.7% in the Midwest. http://i.mktw.net/mw3/News/greendot.gif
Rex Nutting is Washington bureau chief of MarketWatch.
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