The existing home sales indicator is one of the crucial economic indicators in the USA. It tracks the number of homes sold in the previous month that were owned and occupied and entered the market for sale.
In other words, the existing home sales indicator reflects the number of secondary housing sales for the given month.
This indicator is produced by the National Association of Realtors, an organization involved in all aspects of the residential and commercial real estate industries in the USA. It is an organization that also reports Pending Home Sales.
The Importance of Existing Home Sales
The housing market is one of the largest industries in the USA.
In fact, a home is the largest investment of most people in the USA. Homeownership in the USA stands around 65%, meaning that 35% of people living in houses can not afford to buy a house.
The existing home sales indicator calculation includes only closed transactions for the trade of existing single-family houses, apartments, condos, and cooperatives. Because transactions have happened in the past weeks, its impact on the market is limited compared to Pending Home Sales and Building Permits.
Indicator growth can have a positive on the strength of the USD currency pairs. And it reflects the overall economic condition of the United States.
However, since this indicator reflects home sales of owned properties, an investor should take into account the business cycle. For example, during a recession, this number may jump, but it does not show economic strength.