The WSJ reported:
"The battered housing sector took another blow Tuesday,
with an industry group reporting that a gauge of pending home sales
tumbled to its lowest level ever as the credit crunch restrains
The National Association of Realtors’ index for
pending sales of previously owned homes decreased at a seasonally
adjusted annual rate of 6.5% to 85.5 in August from July’s 91.4, the
industry group said. The August index was at its lowest point since
tracking began in January 2001. The previous low was 89.8 in September
Via Lehman Brothers, here’s the chart:
Of course, this is (somehow) good news for the homebuilders:
"Shares of the major publicly traded U.S. residential builders rose for a second straight day Tuesday as investors bet that the stocks have bottomed out after months of freefall. The upswing, which saw most of the biggest firms rise 3% to 7%, came despite the latest government report showing weak pending home sales.
Flattened by the mortgage crunch, a forward-looking gauge of home sales fell further in August to its lowest level in more than six years, a real-estate trade group said Tuesday.
The pending home sales index fell 6.5% in August after dropping a revised 10.7% in July, the National Association of Realtors reported Tuesday. The index is at its lowest level since its inception in 2001.
It could be a case of investors believing the situation cannot get any worse.
Residential builder’s stocks have been battered this year as housing-market conditions have continued to deteriorate and tighter lending standards stemming from the credit crunch have made mortgages more difficult to secure."
More likely, these are still crowded shorts, and every major piece of news seems to be an opportunity to either cover or squeeze the stocks higher . . .
Recall last month, we suggested a bounce was possible due to the this business week cover: Uh-Oh: Bonfire of the Builders.
Mortgage Problems Continue to Hamper Pending Home Sales
NATIONAL ASSOCIATION of REALTORS, October 02, 2007
Pending-Home Sales Decline
By JEFF BATER
October 2, 2007 11:54 a.m.
Builders rally as bleak data inspire ‘bottom’ calls
By Greg Morcroft, MarketWatch
Last Update: 11:46 AM ET Oct 2, 2007
Pending home sales down 6.5% in August
MarketWatch, 10:10 AM ET Oct 2, 2007