Sales of previously-owned homes hit four-month high in January on “pent-up household formation, record-low mortgage rate, bargain home prices and sustained job creation”, lending hope that housing sector will improve in early 2012.

THE TAKEAWAY: The U.S. Existing Home Sales Accelerated in January > Housing Market has been Improving >AUD/USD Bullish.

Sales of previously-owned homes hit four-month high in January on “pent-up household formation, record-low mortgage rate, bargain home prices and sustained job creation”, lending hope that housing sector will improve in early 2012. The National Association of Realtors reported today that existing home sales advanced4.3 percent to a seasonally adjusted annual rate of 4.57 million in January from the revised 4.38 million in the previous month. The reading, however, missed consensus forecast as economists polled by Bloomberg survey had predicted a print of 4.66 million. December figure was downwardly revised to 4.38 million from 4.61 million initially reported.

U.S. Existing Home Sales: June 2010 to Present

Prepared by Trang Nguyen

Existing home sales recovered at fastest pace in four month in January largely due to an increase in completed transactions of single-family, condominiums and co-ops. Single-family home sales surged 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January, up 2.3 percent January 2011 level. Meanwhile, existing condominium and co-op sales climbed 8.3 percent to 520 thousand in the month, down 10.3 percent from a year ago, though.

Regionally,the West registered the largest percentage gain of 8.8 percent to an annual pace of 1.23 million. Sales in the South also advanced 3.5 percent to an annual level of 1.76 million. Besides, sales in the Northeast and the Midwest edged up 3.4 percent to an annual level of 600 thousand and 1 percent to 980 thousand, respectively. Nonetheless, median home prices have continued to plunge amid a steady stream of foreclosures.

AUD/USD 1-minute Chart: February 22, 2012

Charts created using Strategy Trader– Prepared by Trang Nguyen

The U.S. dollar strengthened versus most of its major peers versus its Swiss franc and euro counterparts during North America morning trade today as risk aversion scaled back after Fitch downgraded Greece’s credit rating to C from CCC and warn of possible default in near-term. Regardless, the reserve currency pares gain minutes following the weaker-than-expected existing home sales report. The reading is consistent with Fed’s recent assessment that U.S. housing sector showed sign of improvement but “remained depressed” and “there is still a long way to get back to normal level”.

As can be seen from the 1-minute AUDUSDC chart above, the currency pair briefly fell 15 pips five minutes after the report, then immediately climbed approximately 30 pips from 1.0605 to 1.0635. At the time this report was written, an Australian dollar traded at $1.0629.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, emailtnguyen@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.