US Existing Home Sales Lower 2012.03.21

March 21, 2012 22:10

The National Association of Realtors (NAR) Wednesday reported United States (US) existing home sales declined 0.9% in February to a 4.59 million annual rate due to the upwardly revised figure in January at a 4.63 million annual rate. Yet, the February 2012 figure is 8.8% more than last February. NAR chief economist, Lawrence Yun stated the US’s underlying factors have improved over the year. Furthermore, the median for existing home prices was $156,600 in February, 0.3% higher than February 2011. Distressed homes made up 34.0% of existing home sales in February. Inventory for all existing homes sales increased 4.3% to 2.43 million homes. This represents a 6.4-month supply in the current sales pace while January held a 6.0-month supply.

In other news, the Chancellor of the Exchequer, George Osborne delivered the United Kingdom’s (UK) budget Wednesday. He cut corporation tax to 24.0% and high earner’s income tax to 45.0%. Additionally, he will implement tax allowance increases by £1,100 to £9,205 next year for people have low to middle incomes. As well, he expects government borrowing will end at £126 billion for the fiscal year. Furthermore, he established a stamp duty of 7.0% for homes valued over £2.0 million that will take effect at the end of today. He promised to incorporate a 15.0% tax on properties worth over £2.0 million purchased by companies. As well, Osborne stated he hoped to raise £1.0 billion over the next five years through tax anti-avoidance measures.

The GBPUSD dropped below support at 1.5833 before bouncing back above that level. While it will take a while for today’s measures announced by Osborne to have its implications on the economy, market reaction to the news was mixed. If the GBPUSD breaks below support at 1.5833, we expect further downside to the next level of support at 1.5745.

Eugene Ross, Analyst

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