Skip navigation


Current DateTime: 11:32:00 12 Nov 2009
LinksList Documentid: 24355697

FEATURED QUIZZES


Current DateTime: 11:32:00 12 Nov 2009
LinksList Documentid: 33793611
  • The Billionaire BFF's

      Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

  • The Many Myths of Coca-Cola

      Can you tell which statements are true, and which ones are just rumors?

  • Think You Understand Markets?

      We've selected some questions from the Financial Industry Regulatory Authority's test of investor knowledge. See how you do ...


Current DateTime: 11:32:00 12 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Housing Sales: The Next Key to Recovery?
By: Jeff Cox, , Special to CNBC.com | 24 Jul 2008 | 10:13 AM ET
Text Size

With financials appearing to form a bottom and leading the market on a rally for more than a week, Wall Street will be watching closely to see whether the other shoe -- the troubled housing market -- is about to drop.

Home For Sale - Reduced Priced
AP
Home For Sale - Reduced Priced

There's a broad consensus that the stock market and economy need a real estate resurgence before a full recovery can be made from the recessionary bear market levels that prevail now.

But today's report on existing home sales did little to signal that a resurgence is on the way.

The National Association of Realtors reported that sales dropped by 2.6 percent last month to a seasonally adjusted annual rate of 4.86 million units, more than double the expected decline. Sales are 15.5 percent below where they were a year ago.

The downward slide in sales is depressing prices, too. The median price for a home sold in June has dropped to $215,100, down by 6.1 percent from a year ago. That was the fifth largest year-over-year price drop on record.

The Dow Jones real estate index was nearly 3 percent lower in morning trading.

The market was looking at today's report as well as Friday's numbers on new home sales to provide clues as to how close housing is to a rebound.

If those two numbers came in around expectations and housing prices can show at least some modest gains, that could signal a turnaround.

"We think that if you follow the price of homes, if you look at the outstanding supply of homes, you'll be able to sense when you reach a bottom," Kevin Caron, market strategist at Stifel Nicolaus, said Thursday on CNBC. "While the supply of homes for sale continues to be high, it's at least stopped rising. So there's a little bit of a grain of optimism there, but we still see risks to the economy." (See video)

Caron said he thinks the stock market is beginning to recover.

"I think the overall market is going to move higher eventually. We're trying to be a little bit more optimistic about things," he said. "We came into the year very bearish because we were concerned about what was happing to housing prices as it relates to the broad economy and specifically how it relates to banks."

While not stellar in relative terms, the majority of banks have reported earnings this quarter that at least beat Wall Street's lowered expectations.

That has generated further hope for a recovery, though there remains concern over mortgage rates, which have been climbing despite a protracted campaign by the Federal Reserve to bring interest rates down. Mortgage rates have increased as yield spreads have widened, something that has confounded some analysts who expected to see the spreads shrink as the Fed moves brought down the prime lending rate.

"Mortgage rates are actually higher now than when the Fed started cutting rates in September," said Michael Darda, chief economist at MKM Partners. "We still have some pretty intense stress in credit markets and that more than anything else keeps the Fed on the sidelines for a while."

Darda sees the credit problems acting as a barrier to a full recovery.

"It's just going to take some time," he said. "As long as the credit markets are under severe stress, this economy's going to have a 100 mile an hour headwind."

© 2008 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • CNBC is blogging a talk given by Warren Buffett and Bill Gates to students at Columbia University.
  • US real estate prices have fallen dramatically, but some places are still doing well. See the best-performing zip codes this year.
  • They may have wrecked their company or saved our economy. Tell us what you think.
  • A European dating site finds lovelorn singles from one country to be consistently uglier. Which is it?
  • Contributor David Pogue looks at two of the latest efforts to perfect the digital pocket camera.
  • Just in time for the holidays, the Triumph company of Japan offers the latest innovation in women’s undergarments.
ADD COMMENTS
Remaining characters


Current DateTime: 11:27:47 12 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 11:27:47 12 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 11:27:47 12 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 11:27:47 12 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters