What is U.S. Housing Data?
Most traders look at the housing market as a strong indicator that the economy has underlying strength and the consumers feel confident in the economic outlook. When consumers are buying or building a home it shows they are confident in the economy.
While the Feds policy is largely centered on the rate of job creation and inflation, the housing markets activity plays a key role in the central bank’s assessment of economic health. When mortgage rates decrease or increase the federal funds rate will have a direct impact on consumer borrowing costs.
Data to Watch
Traders focus primarily on Housing Starts and housing-related data releases like new home sales, pending home sales and existing home sales, as well as the weekly application report, which is released every Wednesday.
Housing Starts Report: Based on survey data from builders and contains information about housing completions, new permits, housing starts.
New Home Sales Report: measures the number of transactions that occur with the signing of a sales contract or an acceptance of a deposit.
Pending Home Sales Report: represents sales of existing homes when the contract has been signed but the transaction has not yet closed.
Existing Home Sales Report: represents all home sales where the mortgage has closed and the home sale has been completed.
Weekly Mortgage Application Report: is put together by the Mortgage Bankers Association and is a broad indicator of serious consumer interest in purchasing a home.
It is important for traders to survey a broad rand of surveys and indicators like the quarterly earnings for home improvement chains because it heavily impacted by the short – to medium-term outlook in housing.
The Fed’s monetary policy can be influenced by positive or negative moves in the housing market. A large increase or decrease in home sales can have direct implications for U.S. monetary policy, creating valuable opportunities for traders to capitalize on changing expectations in the housing sector.
Although, there are numerous factors to think about when trading U.S. housing data it can offer many opportunities for traders and should be considered in your trading plan.