US homes sales rebound, US30 hovers above key support

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  •  US existing home sales surprised to the upside in February despite a shrinking supply  
  •  Equity investors remain cautious ahead of the Fed decision  
  •  US30 hovers just above its crucial short-term support

 
In spite of the fact that the US economy saw rising mortgage rates last month US existing home sales managed to rebound at a decent pace quite easily beating expectations. However, it has not helped the beleaguered greenback as it keeps moving lower in anticipation of the Fed verdict. What did contribute to a better reading from the housing market?
US existing home sales bounced back in February despite a deepening supply scarcity.


The results show that sales of previously-owned US houses increased as much as 3% in a monthly basis to 5.54 million last month beating the consensus indicating just a tiny bounce by 0.4%. The details illustrate that the median sales price rose 5.9% in a year-over-year basis partly due to a shrinking supply as available properties declined 8.1% yoy to 1.59 million, the lowest point for February since 1999. One may conclude that rising borrowing costs were offset by a low supply as well as the strong labour market conditions boding in theory well for wage growth ahead. Bear in mind that existing home sales make up as much as 90% of the whole US housing market therefore it is obviously much more important compared to new home sales.

The bottom line is there is not too many concerns with regard to the US housing market when prices keep rising reflecting a robust position of US consumers. Having said that, impending Fed rate hikes suggest borrowing costs are going to climb in the future and on that account it deserves more attention looking for possible turning points in the US economy.
The US30 is dangerously nearing an important support point being underpinned by a local demand area as well as a lower bound of a wedge pattern. A breakout of this level would fuel more declines leading ultimately to a test of the lows drawn at the turn of the previous month.