THE TAKEAWAY: [Sales of new U.S. single-family homes in January higher than forecast, December’s print revised upwards by 17,000] > [Adds to signs of stabilization of housing market] > [USDollar weakens]
Sales of new single-family homes in the U.S. dipped to a seasonally adjusted annual rate of 321,000 in January, according to estimates released jointly by the U.S. Consensus Bureau and the Department of Housing and Urban Development. Although January’s print of 321,000 exceeds the consensus forecast of 315,000 per a Bloomberg news survey, the unexpected fall in sales was due to revisions to December’s figures. December’s figures were revised upwards to a 1.9 percent increase to 324,000, from the initial figures of a 2.2 percent decline to 307,000. Based on the revised figures, sales of new homes declined in January for the first time in five months.
The higher sales at the end of the year add to signs of stabilization in the housing market, while the better-than-expected January sales should bolster further consumer spending in the near-term. Further supporting these signs of stabilization in the housing sector are the better-than-forecast January prints for building permits and new housing starts that were released last Thursday.
USD/CAD 1-minute Chart: February 24, 2012
Chart created using Strategy Trader– Prepared by Tzu-Wen Chen
In the minutes following the data release, the U.S. dollar tumbled against the major currencies, falling 17 pips against the Canadian dollar to a low of $0.9972. However, as markets corrected, the greenback quickly pared most of its losses, though it remained at lower levels than those seen prior to the data release. Despite the better-than-expected sales in January, the revisions to December’s figures indicated a slight cooling of the housing market. At the time of this report, the U.S. dollar was trading at $0.9981 against the loonie.
--- Written by Tzu-Wen Chen DailyFX Research