Housing and Mortgage Data Key Indicators These Days For Stock Markets
When the housing boom was going on, the financial markets watched and absorbed the profits without much fanfare or hesitation. But since the subprime mortgage meltdown of the past few weeks housing has been under the spotlight and is making the market have huge swings in pricing.
If you are an investor in both real estate and the stock market, these are interesting times. Data coming out this week by the NAR and NAHB will be key indicators on how the stock market will be moving.
Last Tuesday, the Dow Jones industrials dropped more than 240 points when the New York Stock Exchange said it was moving to delist New Century Financial Corp.; Accredited Home Lenders Holding Co. said it was low on cash, and the home loan units of GMAC Financial Services and H&R Block indicated they’re struggling.
The subprime mortgage industry isn’t a huge portion of the U.S. economy, but some market sages (including former Fed Chairman Alan Greenspan) are saying troubles could escalate and spill into other sectors if home prices drop off significantly, making mortgages impossible to refinance.
On Friday, the markets will find out if homes lost value in February, when the National Association of Realtors reports last month’s median home price. January’s report — which came out Feb. 27, when the Dow Jones industrials plummeted more than 400 points — showed that the median home price fell for the sixth straight month. The data will also include existing home sales and inventories; economists are expecting February sales to slip to 6.35 million, after jumping to 6.46 million in January.
Investors this week should also get a better idea of how the sluggish housing market is affecting the industries that depend on it. Today, the National Association of Home Builders will release its index on builders’ perceptions of new singlefamily home sales and nearterm sales prospects. And Tuesday, the Commerce Department reports on February housing starts and building permits; the market is expecting housing starts to have risen to 1.450 million from 1.408 million in January, and building permits to have slipped to 1.56 million from 1.57 million. Via the Buffalo News.