June 2013 New Home Sales Data Flattens Equities


Did Bernanke Really Put The Brakes On The Housing Market?

Sometimes good news is bad news, especially when it suggests Ben Bernanke and the FOMC could start tapering sooner than later.  Today’s housing data showed the market is in good health with new contracts nearing May 2008 levels.

U.S. new home sales in June 2013 jumped 8.3% to a seasonally adjusted annual rate of 497,000 units, the Commerce Department reported earlier today. This was much higher than analyst’s expectations and the dollar rose after the news was announced.

The report sent stocks down as trading momentum declined sharply.  Short term traders believe Ben Bernanke and the fed could start ‘de facto tightening’ yet many believe most of the housing boom is caused by investors and the jobs market is still not strong enough to sustain real growth.

The positive housing numbers will continue if employment numbers hit 200,000 for the month of July but without the promise of low interest rates, businesses could hold back on the much needed risk aversion in a sluggish economy.  President Obama is getting in on the economic turnaround with a new agenda and if the gains continue, the market could get used to more competitive rates in the next 12-18 months.  The Mortgage Bankers Association said Wednesday, the total number of mortgage applications filed in the U.S. fell 1% from the prior week so expect mixed data in the near term.   

The short-term outlook for equities is neutral defensive and investors may look for new opportunities to enter the market.  Watch Facebook, Apple, Google and Microsoft as basic measures of overall market sentiment if out of favor stocks become favorites again.


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