Housing Data Expectations Lowered
A: Interesting psychological angle I want to discuss very briefly before the business week starts. On Monday, the National Association of Homebuilders releases its Housing Index. On Tuesday, the Commerce Department releases its latest Housing Starts & Building Permits numbers. With the recent surge in interest rates NOT LIKELY to be reflected in these most recent reports, expectations are already pretty low given the psychological effect of rising borrowing costs of the past 2 weeks. The data will reflect activity further back than what we all just went through. So, I'm betting on better-than-expected data on the housing front over the next few days that will extend the rally in stocks and maintain rates at these levels after the huge run up.
Housing Index - To be released Monday. May's index registered in at 30, down from 33 reported for the April period. This drop represented a weakening outlook for the housing market. With psychology dragging down expectations, chances INCREASE that the data will be better than expected, or if anything, not as bad when they are released.
Housing Starts - To be released Tuesday. Expectations are for a drop in the market of new homes and apartments.
Building Permits - To be released Tuesday. The only of the bunch whose expectations are for a rebound from a 10-YR low registered in April, according to economists surveyed by Thompson Financial. The number will have to beat the rebound whisper expectation for the bulls, and this is the only dataset that I don't expect it to flat out surprise to the upside.
I could be totally wrong on this yielding a completely different market reaction in equities and bond yields. But hey, why not take a stab at it and at least point out that when the surveyed economists and the streets' expectations are already lowered (from previous data/trends plus recent psychological events; i.e. surge in rates), the chances begin to increase that the report, when released, will be better than thought. A pretty simple, yet often overlooked, aspect of the tradable markets.
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Comments (2)
Hi,
What are your fellow brokers thoughts on the recent jump in mortgage rates? Do you feel many of them are factoring this into pricing/accepting bids?
As a buyer in this market, it has certainly caused me to pause and think
Posted by uwsider | June 17, 2007 8:26 PM
Hmmm, really not sure. Most of my colleagues are pure salesman and only focus on closing the deal and not so much on educating their clients on what is going on macro economically and how to adjust.
I'll try to ask some colleagues tomorrow to post here what they think but they may be hesitant to do so.
You have to understand, that in this business many agents feel the less a client knows the easier it is for a sale. Sad, but true aspect of this industry.
Posted by Noah | June 17, 2007 9:15 PM