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Weakness in Housing Is No Reason to Be Happy for Equity Bulls

By FxPro Financial Services Ltd (Alexander Kuptsikevich)Market OverviewNov 28, 2023 05:17AM ET
www.investing.com/analysis/weakness-in-housing-is-no-reason-to-be-happy-for-equity-bulls-200643944
Weakness in Housing Is No Reason to Be Happy for Equity Bulls
By FxPro Financial Services Ltd (Alexander Kuptsikevich)   |  Nov 28, 2023 05:17AM ET
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The US new home sales report came out weak on several key aspects. Sales fell 5.6% m/m to 679K vs 719K a month earlier (revised from 759K).

US New Home Sales
US New Home Sales

The median price of a home sold in October was 409.3K, down 3% from 422.3K a month earlier and 17.6% below the peak of 496.8K set precisely one year ago.

US New Home Median Prices
US New Home Median Prices

Previously, new home sales had been on a moderate upward trend since last July, contrary to a drop in existing home sales. Households were holding off on secondary home sales, unwilling to switch from mortgages at the low rates of the past few years. In addition, new housing was becoming a bit more modest, given falling home prices, contrary to overall inflation.

The latest report puts the focus on the health of the US banking sector with redoubled attention, raising the spectre of a mortgage crisis and later a global world financial crisis.

In theory, weakness in the US housing sector brings the point of interest rate cuts closer. But in practice, such a reason for policy easing cannot be considered favorable for markets, as it would be a reaction to a significant drop in consumer activity and tighter financial conditions - an obvious bearish sign for equities and other commodities.

The FxPro Analyst Team

Weakness in Housing Is No Reason to Be Happy for Equity Bulls
 

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Weakness in Housing Is No Reason to Be Happy for Equity Bulls

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