Release Explanation: Annualized number of existing residential buildings that were sold during the previous month, excluding new construction. They include both quantity and price statistics. 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: Existing-home sales increased 5.1% a 4.72M annual pace in February as lower home prices and more favorable mortgage rates lured bargain hunters into the market, the National Association of Realtors said today.
Foreclosures and short sales reflected about 45% of total existing-home sales last month, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. The discounted prices will discourage the building of new homes, which is essential at this time in that it's important to try and bring inventories down.
For the year, sales have declined by 4.6%.
The median price has fallen by 15.5% from a year ago to $165,400, the second-largest decline on record, as record amounts of foreclosures came onto the market. Affordability is likely to improve in coming months, given that the Fed's plan to purchase longer-dated Treasuries is likely to bring mortgage rates down further.
Inventories were at 9.7 months of supply, the same as in January.
Regionally, sales rose 15.6% in the Northeast, 1% in the Midwest, 6.1% in the South and 2.6% in the West.
Forex Technical Reaction: S&P futures rose over night and the dollar declined ahead of the Treasury's plan to take troubled mortgage assets off the banks' balance sheets. As the official release of the plan was made, futures declined in what looked like a buy the rumor and sell the fact move. Stocks improved after the home sales report and the dollar resumed its decline against the better-yielders.