More Housing For U.S

The week is about to end and our exist queue is to be the sales of previously owned properties in the United States as in April the downside trend for the sector is expected to have continued as not much Americans are convinced yet that it is the time to bargain…

With the vaporizing sentiment in the economy and especially the housing market consumers are not at the place to hunt for new homes since their finances are tight already and face the ghost of unemployment and mounting gas and food prices.

In April Existing home sales are expected to have shed another 1.6% to an annual pace of 4.85 million after 4.93 million in March. The continued degradation in the sector was the leak that spread the contagion into the rest of the economy infecting severely the financial sector as with the collapse of the credit market after subprime loans and households foreclosures mounted the rules have tightened further to mortgage qualifications which is still limiting the drive into the housing spree.

After the dicing and chopping of those mortgages was sold to investors and left no one shielded from the horrific aftermath, still markets are gradually starting to adjust as they try to compensate their losses and strengthen their financial positions. Mortgages to those with bad credit history and the famous products that were highly risky and popular is what set Americans to default on their mortgages and lose their homes, such as those known to be famous with what is called price shocks, which are the negative amortization adjustable rate mortgages, which for the first couple of years allows the borrower the opportunity to pay small monthly payments and then starts escalating at light speed to the extent they can not afford it anymore.

Still the sector's bottoming is one of the major concerns and is one of the bases that need to be achieved to help the U.S economy rise once again. The feds have reached the end of their easing cycle and now the 2.0% rate is lucrative enough to stimulate the economy. Inflation is the concern now especially with the surge in commodities and the amounts of liquidity that was added into the economy whether to the financial sector or the rebates to the public is excess money supply that will reflect the effects of it as well.

The American induced credit crunch has affected world economies as well, as UK is the first runner up to suffer severe slowdown this year. Today will be the second revision to the first quarter GDP estimate which is expected with no change at the sluggish pace seen of 0.4% on the quarter and 2.5% on the year. As for the second European economy it's the advanced PMI day as we are expecting slight softening in May in both the Union and Germany yet rest ashore that till now their fundamentals are 'sound' and they have conquered and survived compared to other nations.

Let's wait and see as the mover will be the home sales in the U.S for today as we are upon the week end squaring as well so be ware, and after the surprise pick up in housing starts you never know we might see one here, which will be taken strongly positive for the dollar, especially that the woes are once more concentrating on the credit turmoil and the need to a bottom in the housing sector. So stay tuned until the data is with us to devour…

Crown Forex

Posted in: Economy,Finance and Investment,Forex