New home sales index is the macroeconomic indicator showing the volume of sold or recently pitched homes purposed for one household. The report records annual level of new residencies sold for the last month. New home sales indicator plays an important role in formation of investment portfolios and is a key indicator of economic stability in the state. The reason is sub-sequence of consumption – upon purchasing a house owners will more probably spend their money to equip it (furniture, home appliances, interior items). As a result, growth of new home sales will ignite further consumption that will increase demand in goods and services. Also such figure reflects trust of consumers. Since the most part of new houses is taken on credit, a borrower has to make sure in their solvency and confidence in the future that indicates health of economy in general.
New home sales report is published by The Census Bureau of the Department of Commerce of the USA at 10:00 a.m EST (New York) or at 6 p.m MSK (Moscow), usually on 25th of every month. Figures above expectations are taken as positive for USD, and figures below expected show a negative position towards dollar.
Impact on the Forex market. Despite its sensitivity against season fluctuations, the indicator of new home sales significantly influences the market. Usually it grows in the beginning of trade cycle and declines by the end of cycle. To mitigate this factor, moving averages are often applied in the process of analyzing this indicator. Also the number of new homes tend to increase together with growth of rate of home equity loan. In recession period, New home sales directly impact on commodities, stocks and bonds. The reason is that new construction market heavily influences the situation in construction companies, mortgage creditors, companies selling household goods etc. Along with new home sales index, analysts also analyze data on existing home sales.
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