BY FRED ARNOLD
The stock market on Wednesday came within 200 points of the all-time record high. Unfortunately some weaker than expected economic news coming out of China and Europe put a damper on investor excitement. Both countries are showing slower growth than anticipated and that has investors concerned about whether it is a sign of things to come in the U.S.
Right now Housing seems to be where it’s at…Stocks related to the improving housing market continue to rise rapidly and there seems to be no lull in sight. Homebuilder stocks have increased 77% through early December. Lumber has risen 74% and home-improvement stores have jumped 55%. These areas of the stock market were the top-performing industries in 2012, according to Morningstar.
Mortgage rates have been rising over the last few weeks and the numbers are reflected in the most recent figures released by the Mortgage Bankers Association. The purchase index declined by 10% last week and refinancing dropped 6%. Some analysts are already making predictions that these numbers reflect a slowing in the housing market. (I don’t understand how after one week of data they can make this analysis). We have seen blips in the upward movement in housing over the last few months however the overall trajectory has remained very positive. Next week there is much more significant housing data being released which will give a far more accurate picture of the status of the real estate market.
First time jobless claims along with continuing claims are at their lowest levels since the start of the recovery. The claim numbers seem to be pointing to the continued building and improvement of the job sector. Last week initial claims fell 27,000 to a 341,000, a level that is nearly 20,000 below the Econoday consensus. The four-week average, at 352,500, is about 10,000 below the month-ago trend which offers an early indication of strength for the February employment report.
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Foreclosures and mortgage delinquencies are at the lowest point since the recession began and that continues to provide fuel to the idea that housing is really beginning to significantly improve. Housing inventory is very low and that is driving home prices higher in almost every area of the country (your house should be worth more now then 3-6 months ago).
Next week housing takes center stage and without a question investors will be watching these reports very closely.
• Tuesday February 19th – Housing Market Index
• Wednesday February 20th – MBA Applications, Housing Starts, Producer Price Index, FOMC
• Thursday February 21st – First Time Jobless Claims, Existing Home Sales, Consumer Price Index
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