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The Two Faces of Housing

July 20, 2011 – 4:55 pm

We have had two housing reports in the last two days. First, was yesterday’s New Housing Starts for June. It was up 14.6%. Most of those starts were in apartments though there were some single family homes started as well. Permits, a leading economic indicator, were up 2.5%, a hint of slightly better new construction in the future.

That slight hope was suppressed with today’s Existing Homes Sales report for June. Sales were down .8%. That was a 7 month low. There was a spike in home sale cancelations at 16% when the month before it was 4% and normally it has been running at 10%. That was a primary cause for the disappointment.

Last week mortgage applications rose 15.5% but almost all of it was for refinancing, not new mortgages.

You can deduce two things from these reports. First, the housing market is still mired in the mud and is not yet recovering. Two, we are seeing signs of stabilization as we near a bottom.

The statistics for housing are very volatile on a month to month basis. The experts expected New Home Starts to be in the 3 to 4% growth area not 14% and they expected a much better Existing Home Sales report. As usually they were wrong, but it is difficult as there are so many cross winds in the housing statistics.

Good Trading
Steve Peasley

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