Sales of new homes in April are projected to have dropped on the month 0.6% to an annual rate of 523 thousand units after dropping 8.5% in March and from 526 thousand units. Americans are yet not lured into the market and not encouraged to buy new homes after the mortgage market dilemma left the financial system thirsty for cash and tighten mortgage rules and availability.
House prices are still seen falling and have more room to soften which is adding to the reasons for those willing to bargain hunt a new home to wait a bit longer until they enter the market. Falling house prices is more of an agony to mortgage lenders and those whom have invested in the sector assuming once that prices will always resume the upside trend. The closely watched S&P House Price Index is awaited today as well; prices are expected to have deepened the fall in March to an annual decline of 14.0% after dropping 12.7% in February, that takes the annualized first quarter's drop to 12.5% after 8.9 percent.
More woes are surrounding the U.S. economy and jitters roam the air, for as long as the housing sector does not find a bottom the ripple effect and the contagion is to continue spreading to other sectors especially to the labor market and expenditure, as consumers' contribution account for nearly 3/4 of the aggregate economy and Americans with their tight finances and deteriorating confidence are not eager to spend to support the economy on their behalf. The Conference Board sentiment index for the month of May today is expected to show that the sentiment is still worsening falling to 60.1 after 62.3 a new multi-year low.
Recession is what many in markets see the U.S. economy in regardless that numbers have not actually reflected that due to as they see unaccountable reasons, while the core of the economy reflects recession. Though expectations were to see two quarters of negative growth yet the GDP advanced estimate contradicted all market expectations and this week the preliminary estimate is to be released and expectation are the revisions are to be to the upside!
Technically, that is supposed to be in respect of a bullish dollar this week, yet still the current market sentiment is in search of stronger basis to build their theories upon a stronger dollar comeback, and probably the first quarter by itself is not convincing enough as we are halfway through the second quarter and no signs of improvement are clearly seen, especially in the housing sector.
After sales of previously owned homes also dropped today the drop in the new homes sales will certainly evaporate the slight optimism gained from rising housing starts and will set the dollar and the cynic perspectives to the U.S. economy to rise once again, and might actually make markets question the signaled steady rates at 2.0% from the Feds on a preemptive inflationary bias.
Stay tuned dear reader for the week withholds crucial imputes within its folds and today's data from confidence to housing are merely the beginning of a hectic week