New Home Sales Rise By 5.8% In November, Exceeding Analyst Expectations

Key Insights

• New Home Sales increased as mortgage rates pulled back from highs.
• Consumer Confidence report exceeded analyst expectations. 
• The reports provided some support to riskier assets despite worries about hawkish Fed. 

New Home Sales Increase Despite High Interest Rates

On December 23, U.S. reported that New Home Sales increased by 5.8% month-over-month in November, compared to analyst consensus of -4.7%. This is a surprising report as the housing market remains under pressure due to high interest rates.

At the same time, it should be noted that mortgage rates declined from their recent highs, which may have served as a positive catalyst for New Home Sales.

Traders also had a chance to take a look at the final reading of the Michigan Consumer Sentiment report for December. The report indicated that Consumer Sentiment improved from 56.8 in November to 59.7 in December, compared to analyst consensus of 59.1.

On Wednesday, CB Consumer Confidence report also showed significant improvement, and it is evident that consumer mood is improving despite recession worries.

The surprising New Home Sales data and the better-than-expected Michigan Consumer Sentiment report may be interpreted as bearish catalysts as positive economic data may lead to a more hawkish Fed. However, markets’ first reaction is bullish.

U.S. Dollar Pulls Back After New Home Sales Data

Riskier assets received some support after the release of the better-than-expected reports. The U.S. Dollar Index moved lower and is currently trying to settle below 104.30.

S&P 500 rebounded from the support at 3800 and moved towards the 3830 level. Positive economic data provided some support to stocks as traders shrugged off worries about an aggressive Fed. It remains to be seen whether this rebound will be sustainable ahead of the long weekend.

Gold remained stuck below the $1800 level, while silver continued to trade in the tight $23.60 – $23.70 range.

For a look at all of today’s economic events, check out our economic calendar.