New Home Sales Increase April 2012 Plays Backseat To EU Summit Speculation As Markets Rally:
New home sales increased in April giving more fodder to those who suggest the housing market is improving. The increase in new home sales was largely overshadowed by European stress syndrome and related speculation that Greece would be leaving the EU which is at all time highs. The euro fell sharply against the dollar which we have been watching carefully as EU leaders meet today to discuss possible capital liquidity improvements for the region.
The Commerce Department said Wednesday that April 2012 new-home sales increased 3.3 percent to a seasonally adjusted annual rate of 343,000. The increase in new home sales is still low compared to what we would consider a healthy, expanding market with sales up 750,000 or more monthly.
The median new home sold for $235,700, which is an increase from March 2012 but the average price fell slightly.
The Federal Housing Finance Agency (FHFA) released housing data that confirmed home sales are rebounding. The FHFA Wednesday released data that showed home prices increased 1.8 percent in March and increased 2.7 percent year over year. This confirmed data released yesterday from the NAR that showed a housing price jump that was the biggest in 10 years.
Good news from the sector that was hit the hardest by the financial market collapse of 2007-2008 was ignored by speculation about Greece leaving the EU and Spain bank runs or “Spexit” (Spain exiting the Euro – a term we first today) hurt market sentiment early. Financials led the rebound late in the session along with housing stocks as traders predict more liquidity will enter the global money supply and a strong statement will come from the EU Summit being held tonight.
Regardless of the strong statement expected from EU officials, there is an increased possibility the euro will not contain all current member nations a year from now and we believe a possible breakup of the region is beneficial for capital movements long-term. The EU Summit May 2012 still adds some headline risk so we will continue to monitor dollar movements as the euro’s first real test against the dollar is made. Dollar-euro parity isn’t far from here.