Home sales in September rose for the first time since May, with buyers taking advantage of a plateau in mortgage rates over the summer before the surge in recent weeks
September's home sales uptick marks the first increase since May, suggesting a temporary easing in the housing market as buyers leveraged relatively stable mortgage rates over the summer months. While a 1.5% rise indicates some recovery, overall sales activity remains muted, signaling persistent structural challenges in the market. This development is pertinent as shifts in consumer sentiment could influence broader economic conditions, including the FX landscape, as higher home sales can lead to improved consumer spending.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). wsj.com's view aligns more closely with the upper third — JPMorgan and ING share that framing.
How firms align
JPMorgan, aligned with the broader sentiment reflected in the recent home sales data, targets EUR/USD at 1.10, as noted in our internal report /reports/jpmorgan. In contrast, BofA's position suggests a more bearish outlook with a target of 1.04, indicating divergence in expectations about consumer spending and economic recovery.
What the data shows
The recent home sales increase contrasts with ongoing cautious consumer sentiment, as cited in research /research/consumerconfidence. Despite this, any sustained improvement in housing could lead to upward revisions in growth forecasts, particularly in the consumer-driven sectors.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Home sales up 1.5% in September, marking first increase since May.
- 02Stable mortgage rates over summer may signal a consumer spending shift.
- 03JPMorgan targets EUR/USD at 1.10 amid recovering housing sentiment.
Market implications
Attention should be focused on upcoming housing market data and consumer confidence indicators. A continued rise in home sales could push EUR/USD towards our consensus target of 1.075.
Risks to this view
Any significant rise in mortgage rates or a reversal in home buyer sentiment would invalidate this bullish view, potentially leading to a reassessment of economic growth projections.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.35
Sources & References
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