September 25, 2003

Housing Torrid, Index Languid

Durable goods sales fell in August. But homes sales weren’t just durable, they were robust. With long-term rates (and by extension mortgage rates) not rising super fast, housing has stayed surprisingly strong. Surprising to me anyway. Bloomberg reports that, “sales rose 5.5 percent for existing homes and 3.4 percent for new homes last month.” What’s interesting is that the Housing Index (HGX) is not making new highs off the strong data. HGX hit 312 on the 19th of September, perhaps anticipating the strong August new and existing home sales numbers. Today, its down modestly. This is a good time to reenter a position with puts. If HGX can’t make a new high on strong August data, its bull move may be over. Mortgage rates may stay historically low for awhile. But when they move--and they will--investors will dump housing stocks. HGX Doesn't Make New High on Strong August Sales


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