Pending Home Sales Index (PHSI)

 

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Pending Home Sales in the United States increased 0.80 percent in November of 2017 over the same month in the previous year. Pending Home Sales in the United States averaged 1.08 percent from 2002 until 2017, reaching an all time high of 30.90 percent in October of 2009 and a record low of -24.30 percent in April of 2011.

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The chart below is from Hedgeye’s Morning Macro Deck. I’ve been glued to the developments transpiring in the housing market due to my family building a new home. Makes the subject come alive, more so when you have some skin in the game. I think that’s true in all aspects of life.

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Nevertheless, I can’t understand viewing one’s home an investment. I depreciation alone would eliminate the carry on such an investment. Here’s Robert Schiller to explain more:

 

Saw this while waiting for the PHSI to be reported. lol.

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See you there!

Market Sensitivity: Medium.

What Is It: Measures monthly sales of previously owned single-family homes.

Most Current News Releases on the Internet:

Existing Home Sales: www.realtor.org/topics/existing-home-sales/data

Pending Home Sales: www.realtor.org/topics/pending-home-sales 

Housing Affordability Index: www.realtor.org/topics/housing-affordability-index

Home Web Address: www.realtor.org

Release Time: 10:00 a.m. (ET); published four to five weeks after the month being reported ends.

Frequency: Monthly.

Source: National Association of Realtors.

Revisions: Monthly revisions tend to be small. Annual revisions due to seasonal adjustment factors take place in February and can cover the preceding three years.”

Bernard Baumohl. The Secrets of Economic Indicators

 

Market Impact
Bonds

Reaction to existing home sales is muted unless the economy is edging closer to over-drive and facing an eruption of inflation pressures. Any unexpected jump in existing home sales could easily scare away bond investors, a scenario that will lower bond prices and raise yields.
A sudden plunge in sales might foreshadow a slowdown in economic activity in the months ahead, which would support higher bond prices and lower rates. Thus, to a large extent, the response to this release really depends on the economic backdrop.

Stocks

From the standpoint of corporate profits, investors prefer to see existing home sales stay at a high level. Housing is a major industry upon which many other businesses rely. A strong report will buoy stock values, whereas a weak report might undermine them. However, if strength in housing fires up inflation, the Federal Reserve will eventually intervene with higher rates, and such a prospect can upset the equity market.

Dollar

Foreign investors monitor existing home sales because it is one of the dominant indicators of consumer spending and can potentially influence interest rates. Generally, the dollar will remain firm or appreciate as long as existing home sales do not stumble into an extended downswing. A sluggish housing market would lower rates and raise uncertainties about future stock prices, both of which can weaken demand for U.S. currency.

 

-R.W.N II

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