Housing Hubbub (Part 2)

Now the pundits are having their say.

Yesterday I discussed pending home sales. While they’re down year-over-year, they’ve been essentially flat for the last six months.

That’s good news? Don’t we want the economy to grow? I thought flat was bad.

Yes, but because the housing market has been falling, stability is actually quite encouraging. Interestingly, the number of pending sales has been falling since the middle of 2004. So while the underlying economics may be stabilizing, it may take a while for this to work itself out in the economy.

But the stock market is a forecasting mechanism. And any trend that predicts eventual stability in the housing market is going to be very good for consumer and financial stocks.

Given the beating that these stocks have taken over the past couple years, any whiff of good news should quite helpful.

Douglas R. Tengdin, CFA
Chief Investment Officer
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