Existing home sales
|Release Date:||Usually released monthly, about 20 days after the month under review ends|
|Release Time:||At 11am US Eastern Time|
|Coverage:||Release covers the previous month’s data|
|Released By:||The US Census Bureau|
The Existing Home Sales is a monthly report released by the National Association of Realtors. The report is also known as the Home Resales report, and is a measure of the number of existing (not new) residential buildings that were sold during the previous month under review. The figure is reported in an annualized format (i.e. monthly figure multiplied by 12).
Time of Release
The Existing Home Sales report is usually released monthly, about 20 days after the month under review ends. The time of release is 11am US Eastern Time. The data is released on this webpage of the US Census Bureau (www.realtor.org/topics/existing-home-sales) and also on independent news feeds from Bloomberg and Thomas Reuters.
Interpreting the Data
The Existing Home Sales is a high impact news event which can be traded as a news trade. Ever since the collapse of the housing market was identified as the trigger for the global financial meltdown, housing data have become highly tradable news events.
The Existing Home Sales data has even become more important, as the majority of all houses sold in the US are existing homes. This news report is therefore more important than the New Home Sales report, and is also more tradable because it has a higher market impact.
The real estate sector has been described as one of the largest employers of labour. An existing home will need renovation by the new occupants. This provides short term employment to building contractors, masons, plumbers, carpenters, masons, etc. If it was a repossessed home, the mortgage will be sold by the financing bank, and mortgage brokers get to execute the transaction.
Therefore, a higher than expected Existing Home Sales report will be seen as USD positive and will lead to a gain of the US Dollar across board. A lower than expected reading is seen as USD negative.
Even more important is the pattern of the Existing Home Sales readings. Even the website of the National Association of Realtors makes reference to this fact. The Existing Home Sales has been persistently falling since September 2013. Not only will this lead to investors selling the EURUSD as they did on February 20 when the last result (4.87million homes resold) came out less than expected (4.94 million homes resold), but the consistent drop in the number of home resales is beginning to sound alarm bells in the market.
In addition, the commentary on the Realtors website read as follows:
- sales in the lower home-price tiers are falling, sales at the upper end are rising, quite swiftly at the highest end. This may mean that the mix of homes is changing.
- This shift in the mix of homes selling has the effect of pushing up the price of the median home sold, which is simply the price of the home where 50 percent of all homes sold were priced above and 50 percent were priced below that sales price.
If we look at these two comments, we would see that these are positive developments and so we would tend to see a muted response to what may be a bad number as seen on the charts.