Better than expected U.S. housing market numbers failed to help the dollar on a day when the greenback is being sold against the euro, British pound, Japanese Yen and other major currencies. Existing home sales rose 2.7 percent in the month of January, marking three back to back month of positive momentum in the housing market. Sales of existing homes surged in December, leading many investors to look for a natural pullback in January. However in addition to climbing to the highest level in 8 months, existing home sales growth in December was also revised higher. The total number of units sold hit 5.36 million, up from 5.22 million the previous month.
However the growth in existing home sales was marred by a sharp decline in house prices. The average price of a home sold fell to its lowest level in approximately 9 years. This indicates that homes are only being sold because homeowners have become more flexible with pricing. In January, the average price of a home sold was $206.7k compared to $217.9k the previous month. On a year over year basis, house prices fell 2.6 percent. The steepest decline was seen in the prices of condo and co-ops which dropped 7.3 percent while the price of single family homes fell 2.6 percent. Interestingly enough, sales of existing homes fell in the Northeast, leaving the Midwest, South and West to pick up the slack.
Meanwhile the lack of new developments in Libya has helped to calm the anxiety in the foreign exchange markets, allowing currency traders to focus on inflation and the realization that other central banks are more eager and willing to raise interest rates than the Federal Reserve - this explains the latest price action in the U.s. dollar.