Declines in US Housing Market Weigh on Sentiment
In recent months, most of the market’s central focus has been very headline driven and directed toward the Eurozone debt crisis but that is likely to change this week, as we will have some very important data released which will give investors an idea of the economic progress that is being seen in the US. Most of the main releases will come toward the end of the week but some important precursors will be seen first, with the first being the Housing data released today.
These numbers showed that home values in the 20 largest cities in the US dropped on a yearly basis for the March figures, coming in at its weakest pace since the beginning of 2011. The significance of the numbers comes from the fact that the broader economy is showing signs of improvement, with borrowing costs from private lenders at some of their lowest levels in recent memory and an uptrend seen in the nation’s employment market.
Case Shiller Home Index Results
Looking at the specific content of the latest report, we can see that home prices saw declines of 2.6 percent from this same point last year. So the main question for traders during the rest of this week will be extent to which these latest figures are indicative of broader economic activity in the US.
Despite the declines, there is some evidence that the nation’s real estate markets are stabilizing as inventory levels are dropping and home builders saw a strong selling season in Spring. These positives, however, are being balanced by disappointing wage growth, which is preventing sellers from commanding higher real estate prices.
Unsurprisingly, stock markets dropped after this data was released, and this was combined with additional declines in the latest Consumer Confidence figures that was released for the month of May (the third straight month of declines in Consumer Confidence). These numbers came in at 64.9, which is the biggest drop seen this year and shows a marked decrease from the 68.7 printing that was seen in April. The combination of these disappointing numbers are preventing further gains in the S&P 500, which is now trading just below some widely watched resistance levels that are currently seen at 1340. The main question for the rest of this week’s trading will be whether or not these figures are matched by the critical employment that is scheduled for release on Friday. Stock market direction is clearly focused on the downside, so we will need to see some strong jobs figures to reverse this trend.
