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Housing’s Progress

September 19, 2012 – 5:04 pm

Early this week statistical reports focused on the housing market. Yesterday the home builder index showed a small improvement telling us home builders feel ever so slightly better about the housing market. This morning new housing starts for August were expected to grow to 775,000 from 736,000 with the actual number being 750,000 with July starts revised downward and later in the morning we will have existing home sales reported. Permits for forward new construction were slightly down for August after reaching a four year high in July. Permits for single family homes were up slightly with most of the weakness in apartment construction which has been leading the way in construction for some time.

The main driver for future improvement is the FED’s QE3 which essentially ensures low borrowing costs for the next couple of years. The builders like the consistency of the message the FED is providing. A significant part of a better home sales market is confidence by the average buyer. Anything that provides more confidence in your decision to buy a home helps not only the builders but filters through the entire economy.

Of course it would also help if more jobs were produced but you can’t blame the FED since they have been and continue to be very accommodative with cheap money. On the other hand that cheap money may come back and take a bite of the future economy if inflation starts to heat up.

Good Trading,
Steve Peasley

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