New Home Sales is an indicator that measures the number of new single-family homes that were sold during the previous calendar month. Being a key indicator of the housing market demand, the indicator is able to affect the exchange rate of currency pairs with USD. This report is tightly correlated with the U.S. Existing Home Sales indicator. Together, they can have a large impact on the exchange rate of the national currency.
Why is it important?
Housing industry is one of the pillars of the American economy. Lower home sales inevitably lead to decreasing construction activity in the country. Real estate market is tightly connected to the economic conditions. When the national economy is standing on the verge of a crisis, a decline in the number of new house acquisitions can be expected. The indicator, therefore, can be used to predict the well-being of the American economy, which, in turn, affects the exchange rate of the USD.
Practical application
A higher than expected reading should be taken as bullish for the USD, while a lower than expected reading should be taken as bearish for the USD.
The United States New Home Sales
The United States New Home Sales latest reading for the month of May 2017 was 610,000, higher than the forecast reading of 597,000 and higher than the previous reading of 593,000. The latest reading is lower than the highest reading of 644,000 in March of 2017 for the first semester of the year. The United States New Home Sales are in an uptrend since 2012, with a long-term average reading of 651,090 for the period of years 1963-2017. The all-time low reading was 1,389,000 in July of 2005, and the all-time low reading was of 270,000 in February of 2011. The most recent annual and seasonally adjusted growth rate is 2.9%.
