US existing home sales rise in September; higher mortgage rates dim outlook
US existing home sales rose in September, surprising many analysts by defying expectations of a downturn amid rising mortgage rates. The increase is largely attributed to enhanced inventory levels, providing buyers with more options. However, the overall sentiment remains cautious as elevated housing costs continue to challenge the market's momentum. This mixed data underscores the delicate balance between supply and financial conditions, with potential implications for consumer spending and, consequently, currency valuations.
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). Reuters' framing hints at a weakening outlook, which aligns more closely with BofA's bearish stance.
How firms align
Goldman's bullish perspective supports the positive sentiment from the housing data, reflecting an anticipated consumer resilience. Conversely, BofA's forecast suggests skepticism about sustained growth, particularly due to the ongoing pressures from high mortgage rates. For detailed insights, see our internal /reports/goldman and /reports/bofa pages.
What the data shows
Recent forecasts indicate a cautious outlook on housing, with revisions pointing towards slower growth ahead due to persistent mortgage costs. This aligns with previous insights documented in /research/housing-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01September's home sales rise contrasts with high mortgage rates, indicating a tricky market dynamic.
- 02Watch how housing data influences consumer sentiment and currency flows.
- 03If EUR/USD holds above 1.075, it could signal trader optimism despite rising costs.
- 04High mortgage rates may dampen future growth prospects, particularly in Q4.
Market implications
Traders should monitor the EUR/USD stability near 1.075, a critical support level. Upcoming economic indicators, particularly related to consumer spending and inflation, could further influence sentiment. With our consensus set at 1.075, any deviation in housing data could alter the outlook significantly.
Risks to this view
A sudden drop in home sales or unexpected monetary policy adjustments could invalidate the current view. If rates continue to climb or if consumer confidence wanes, we may see a rapid reassessment of currency positions, particularly against a backdrop of broader market volatility.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.35
Sources & References
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