From Steve Sjuggerud at Investment U, regarding the top in housing stocks –
As of yesterday, new home prices have spiraled downward for three straight months.
They’re down 14% in that time, from $236,300 in April, to $203,800 today. A drop of more than $30,000!
Yet the media reported exactly the opposite…
"New home sales defied expectations, rising 6.5% to break yet another record during July." That’s what The Wall Street Journal reported on page C2 today in the markets section. But they left out a very important detail.
The Second "Story" to Housing
The way The Wall Street Journal reported the statistics, it seemed like home prices have been going up. But it was the number of houses sold rising 6.5%. The median price of a home fell in July alone by – get this – 7.2%. Wow!
Take a look:
That’s a pretty nasty drop, no? Why wasn’t this reported with more fanfare? (To be fair, there was a brief mention – one phrase – on the drop on page A2 of the WSJ.)
From New Homes to Home Builders, It’s the Same Story
The stock market tends to lead the economy (that’s why it’s best to buy stocks in bad times, and sell them when times look too good). If this is true, then housing stocks (homebuilders) might be said to lead the market for new homes.
It’s been true… housing stocks have soared for a few years now. But they’ve been falling in the last month or so. The entire index is down roughly 10% from its high a month ago.