Why investors should keep an eye on existing home sales this week

Next week is relatively slow, data-wise

This week is a short week with the Martin Luther King Jr. holiday and not a lot of market-moving data. Tuesday and Friday have no economic data, and only Thursday has anything meaningful. The Markit PMI and existing home sales will be the highlights. We’ll also get the FHFA House Price Index, which should show home prices are now within 10% of their peak levels. Note that the FHFA index doesn’t include the entire market—just the properties that have a conforming mortgage.

Existing Home SalesEnlarge Graph

Economic data this week

Monday, January 20

  • Martin Luther King Jr. day: Markets closed

Tuesday, January 21

  • No data

Wednesday, January 22

  • MBA Mortgage Applications

Thursday, January 23

  • Initial jobless claims
  • Bloomberg Consumer Comfort
  • Chicago Fed National Activity Index
  • Markit PMI
  • FHFA Home Price Index
  • Existing home sales
  • Leading economic indicators
  • Kansas City Fed

Friday, January 24

  • No data

Earnings reports this week

No real estate–related earnings this week.

Impact on mortgage REITs

Mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and MFA Financial (MFA) are highly interest rate–sensitive. There’s nothing next week that should be all that important to the REITs, although the Markit PMI will give clues as to the strength of the economy. REITs that focus on origination will pay attention to the existing home sales number.

Impact on homebuilders

Next week contains a lot of data that will be of concern to the builders. The existing home sales data will be of interest to builders like Lennar (LEN) and Standard Pacific (SPF). The Markit PMI will give clues about the continuing manufacturing recovery.