New Home Sales should do little this month. Economists look for an annual rate of 300k in September, almost an average of the 295k pace in August and the 302k rate in July. The trend should at least be upward though, thanks in part to low mortgage-rates.
“New home sales likely remained moribund in September,” said Citigroup. “Pending sales data dipped and single-family starts and permits for the month showed no sign of improvement. New home sales are unlikely to pickup in the near term with so many near new homes currently on the market.”
Janney Capital Markets said homebuilders are finally starting to capitulate on price.
“After holding the line on pricing in a way that made newly built properties much more expensive than existing ones, builders began to offer better headline deals in July. In just the two months of data subsequent, the median price of new homes sold dropped 12.3%. That two month decline is the biggest price drop in the nearly fifty year history of new home sales data, a strong sign that builders are simply changing their strategy.”
The Treasury curve steepened overnight and equities returned to rally mode as the market waits for the European Summit to begin at Noon eastern time.
The 10-year and 30-year Treasury yields are three and two basis points higher at 2.14% and 3.16%, while cash flowing to the short-end has pushed the two-year yield down two basis points to 0.27%.
S&P 500 futures are 6.5 points higher at 1,231.10 and Dow futures are 78 points higher at 11,740. The S&P shed 25 points yesterday and the Dow lost 207 points after the latest earnings looked weak.
BMO Capital Markets said expectations have faded a bit for the Euro summit as officials have said to expect few concrete numbers.
“Look for some details on plans for the EFSF, a direction for Greek debt negotiations, and more information on the bank recapitalization plan. But, anyone hoping for a ‘Grand Plan’ will probably be disappointed,” BMO said. “We’ll get something, but it likely won’t mark the end of this crisis. But once European leaders make a decision, the decision would still have to go to the German parliamentary budget committee for approval.”
Meantime, light crude oil jumped 0.39% overnight to $93.54 per barrel, while gold prices rose 0.42% to $1,707.60 per ounce.