Stocks rally mid-morning on Bernanke and existing home sales numbers. Mr. Bernanke, speaking in Jackson Hole, said the economy is on the verge of recovery, while emphasizing the "additional losses" banks face and the difficulty that consumers are facing with the job market.
Existing home sales were also helpful. The good news: Sales were up 4 straight months, the first time that has happened since the summer of 2004.
The bad news: Because more homes were on the market, the inventory of homes for sale was unchanged at 9.4 months.
There's a couple of headwinds for home sales:
1) Higher mortgage rates, certainly rates that will be higher than early spring; in early spring, 30 year fixed rate mortgages were available at 4.75 percent, now they are 5.35 percent.
2) The $8,000 first-time homebuyer tax credit expires Nov. 30. Specifically, to be eligible for the credit purchases must be completed by Nov. 30th. With closings taking a couple months, that means contracts should be signed by the end of September to be safe.
Will there be an extension of cash for clunkers? Not clear yet.
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