Release Explanation: Change in the number of homes under contract to be sold but still awaiting the closing transaction. Important since the housing market is included in most economic forecasts. Retail Sales, CPI, and PCE in the US. A happy householder will usually lead to a strong economic outlook. A miss here, either way, and the Markets gets to see the real confidence of the US consumer. There is a very strong impact on the sentiment towards the US Dollar from this report.
Trade Desk Thoughts: The number of signed contracts for home purchases fell 7.7% in January, the National Association of Realtors said today, a sign that the weakness in housing will persist well into 2009. A 3.5% decline had been expected by economists.
Demand is declining in part because buyers expect to see lower prices, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. Some economists, such as Nouriel Roubini, believe prices need to fall another 20% before a bottom can be seen.
The group’s index decreased to 80.4 in January, the lowest level since records began. Sales in three of four regions dropped, with a 13% slide in the Northeast and a 12% decline in the South. Pending sales increased 2.4% in the West.
In the year to January, pending sales decreased 6.4%.
“Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,” Lawrence Yun, the group’s chief economist, said in a statement. “We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions.”
Forex Technical Reaction: Equity markets opened higher after yesterday's steep decline, and were recently trading up 0.50%. The dollar weakened in overnight trading as S&P futures improved on speculation the Fed would announce the starting date of the TALF program.