THE TAKEAWAY: US Existing Home Sales declines in December > Limited house supply due to tight inventory and restrictive mortgage underwriting standards > USD/JPY Weakened
The pace of U.S. home resales declined unexpectedly in December, as limited supply of houses up for sale drove prices higher. The National Association of Realtors in Washington reported today that existing home sales fell 1.0 percent to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million the previous month. The latest reading lagged behind the median forecast of 79 economists surveyed by Bloomberg News, which called for 5.10 million. Also, the median home price rose 11.5 percent from a year earlier to $180,800, the most since 2005.
Though the home sales were limited due to the tight inventory, total home sales in 2012 hit the highest record in five years. These latest figures suggest that the housing market is on its way to recovery, as more Americans take advantage of record low mortgage rates. In addition, for most consumers, the prices are still affordable after value of real estate fell below replacement construction costs. Thurs, overall sales are likely to stay on an upward trend this year.
USD/JPY 1-minute Chart: January 22,2013
created using Market Scope – Prepared by Renee Mu
In the initial minutes following the release of the housing report, the U.S. dollar weakened against the Japanese yen. At the time this report was written, the USD/JPY pair was trading lower at 88.65 yen.
--- Written by Renee Mu, DailyFX Research