THE TAKEAWAY: US Pending Home Sales unexpectedly declines in August > Uneven recovery in the U.S. housing market > USDJPY bullish
The number of signed contracts to purchase previously owned homes in the U.S. unexpectedly declined in August, indicating an uneven recovery in the U.S. housing market. The National Association of Realtors reported today that its pending home sales index, a forward-looking indicator based on contract signings, fell 2.6 percent in August from a month earlier, following an upwardly revised gain of 2.6 percent the previous month. The consensus forecast of economists surveyed by Bloomberg News had called for a 0.3 percent increase in August. On an annual basis, pending home sales slowed to 9.6 percent growth in August after surging 15.2 percent the period before. The year-on-year figure for August falls well short of the 13.5 percent gain that had been widely expected.
Despite mortgage rates remaining at record lows, recovery of the housing market continues to face headwinds amid persistent elevated unemployment, stagnant wage growth and tight lending conditions. In contrast to the decline in pending home sales, the U.S. Consensus Bureau reported last week that existing home sales in August had jumped to a two-year high.
USDJPY 1-minute Chart: September 27, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
The U.S. dollar strengthened against the Japanese yen following data release despite the disappointing housing data. At the time the report was written, the USDJPY pair was trading higher at 78.67 yen.
--- Written by Tzu-Wen Chen, DailyFX Research