Exciting news for our traders in the United States! 🎉 We’re thrilled to welcome you aboard.
The U.S. housing market holds a special place in the spotlight, and it’s not without reason. A thriving housing market signals underlying economic strength and reflects the confidence consumers have in the US economy. After all, buying a home is one of the most substantial financial commitments individuals ever make, so when people are eager to buy or build homes, it speaks volumes about their faith in the economic future.
There are several news sites and companies focusing on the upcoming economic events of the market. While the Federal Reserve, often referred to as the Fed, primarily focuses on factors like inflation expectations and job creation in shaping its policies, it pays close attention to what’s happening in the housing market. This market plays a pivotal role in the Fed’s assessment of overall economic health.
At the same time, the housing market is acutely sensitive to mortgage rates. Any change, be it an increase or decrease, in the federal funds rate has a direct impact on what it costs consumers to borrow money.
Key Housing Data to Keep an Eye On
Traders closely follow various monthly housing-related reports, with a primary focus on key indicators such as Housing Starts, New Home Sales, Pending Home Sales, and Existing Home Sales. Additionally, they keep a watchful eye on the Weekly Mortgage Application Report, a weekly update released every Wednesday.
- Housing Starts Report: This report relies on survey data from builders and provides insights into new permits issued, housing construction commencement, and completed housing projects.
- New Home Sales Report: It quantifies the number of transactions initiated through the signing of sales contracts or the acceptance of a deposit for new homes.
- Pending Home Sales Report: This report reveals sales of existing homes when the contract has been signed but the transaction has not yet reached completion.
- Existing Home Sales Report: It encompasses all home sales where the mortgage has successfully closed, and the home sale has been finalized.
- Weekly Mortgage Application Report: Compiled by the Mortgage Bankers Association, this report serves as a broad indicator of consumers’ serious interest in buying homes.
Quarterly earnings reports from home improvement retail chains are also significantly influenced by the short- to medium-term outlook of the housing market. For traders, it’s crucial to explore a wide range of surveys and indicators since different data releases serve varying purposes. Some are better at providing insights into the future direction of the housing market, while others are more suitable for analyzing its current status.
In Conclusion
It is important to recognise that the Federal Reserve’s monetary policy can be swayed by both positive and negative developments in the housing market. A substantial surge or decline in home sales can directly impact U.S. monetary policy decisions. This creates valuable opportunities for traders to capitalise on shifting expectations within the housing sector.
Trading U.S. housing data requires careful consideration of several factors, but armed with insight and thorough preparation, traders can harness the potential offered by these data releases and uncover numerous opportunities in this dynamic market.
