Forex News: US New Home Sales due at 10:00 AM EDT

At 10:00 the first of two house sales releases will be announced when US New Home Sales for the month of May is scheduled to come out.  Tomorrow the larger Existing Home Sales will be announced.  Last month the sales rose unexpectedly by 3.3% versus the prior month.  The annualized rate also jumped to 526,000 from 509,000 which was the lowest sales pace in over 17 years.  The gain was the first rebound since October 2007.  However, the level still remains at 17 year low levels and expectations are that a major rebound is still months away. In addition to the sales figures, the average price of a home rose surprisingly to $246,000 from $225,000.  However, this number can be influenced by changes in the mix of sales and therefore is not a good reflection of the actual price trend.  Case Schiller released yesterday showed a decline of 16% from a year earlier.  This is a better indicator of price trends.  Finally, the month’s supply of homes on the market dropped to 10.6 months from 11.1 months in March.  This still is well above what is normal. 

This month the expectation is for the sales to slow back down.  Estimates are for the annualized pace to slow to 512,000 and for the change from last month to show a decline of 2.7%.  Note that prior months can be revised dramatically which can distort the month on month percentage change values.  As a result, traders prefer to follow the annualized sales pace to see the true state of the sales.  In addition, the market will be watching the months supply data to see if any dents are being made with regard to supply.  With higher mortgage rates, slower employment, higher inflation, and a large supply, expectations for a rebound in housing is still months away.