FXStreet (Mumbai) – US Pending Home Sales Index is scheduled to be released today at 1500 GMT. Month on month, the pending home sales is expected to rise 0.5 per cent in November as against 0.2 per cent recorded previously. Markets will closely watch today’s pending home sales data as they are considered a leading indicator for existing sales. As we know that the pending home sales index leads existing home sales by a couple of months, we can expect today’s figures to give an indication of the existing home sales in December. Existing sales is the only worrying factor in an otherwise strong house market.
Pending home sales index had moved up in October. However, even after the 0.2 per cent increase registered in October, the figures had stayed close to its lowest level in months. Analysts are confident that this time around a rebound in pending home sales is very much possible.
If the pending sales do rise 0.5 per cent meeting market expectation, it will imply that the fall in existing sales last month was an one off incident that will soon improve to show firmer numbers. Lawrence Yun, chief economist at the National Association of Realtors firmly believes that “stark sales decline [last month] wasn’t because of sudden, withering demand.”
Yun said “Signed contracts have remained mostly steady in recent months, and properties sold faster in November”. According to him, positive fundamental s like demographics, substantial improvement in labor market, increase in income growth, and low mortgage rates will likely help to push up pending sales. He has however warned that the limited supply of houses to be sold might cause some disruptions in the near-to-medium term.
Mortgage Applications
US Mortgage Applications for week ending December 25th is also scheduled to be released today at 1200 GMT. The report for week ending December 18th showed an upbeat outlook for demand. Total applications was noted to have surged 7.3 per cent for the week ending December 18th, which was the biggest weekly increase since August.
The November report on existing home sales showed that transactions stumbled to the lowest level in well over a year. The news sparked concerns in the markets. However, there was much relief on the news that new home sales had increased last month, touching the highest level in nearly six years. Also, data released recently showed prices for existing homes in October posted healthy gains. David Blitzer, chairman of the index committee at S&P Dow Jones Indices said “Generally good economic conditions continue to support gains in home prices”. He however questions how the tighter monetary policy will affect demand for housing. Given that the Fed has said that the subsequent rate hikes will be gradual, Blitzer has advised that “potential home buyers need not fear runaway mortgage interest rates.”
(Market News Provided by FXstreet)