THE TAKEAWAY: [Demand for U.S. new homes sales jumps to highest since April 2010] > [Housing market stabilizing despite broad-based weakening of U.S. economy] > [USDCAD mixed]
Demand for new single-family homes in the U.S. jumped in May to its highest level since April 2010, as lower mortgage rates boosted the residential housing market. A report released jointly by the U.S. Consensus Bureau and the Department of Housing and Urban Development showed that new home sales climbed 7.6 percent to an annual pace of 369,000 in May from 343,000 in April. The latest print beat the consensus forecast of 347,000 sales, according to 67 economists surveyed by Bloomberg News.
Despite weakening in the broader economy, the housing market seems to be picking up. Adding to signs of stabilization are rising new home prices, with the median price of climbing 5.6 percent from a year ago to 234,500. Furthermore, the average time to clear houses from the market fell to 4.7 months in May, the shortest since October 2005, from 5.0 months in April. The strengthening demand for new homes is expected to boost construction activities, which will help bolster U.S. economic growth.
USDCAD 1-minute Chart: June 25, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
Immediately after the data release, the U.S. dollar fell as much as 11 pips against the loonie, as strong construction-related growth in the U.S. tends to support stronger demand for construction materials in Canada. However, the market quickly reversed direction, and at the time of this report, the USDCAD pair was trading higher than pre-data levels at C1.0215.
--- Written by Tzu-Wen Chen, DailyFX Research