The Case Shiller housing report contained good news Tuesday.
The index for the 20 cities surveyed fell 11.3% from a year ago (which is the best showing since early 2008), but rose 1% versus last month. The three month over prior three month annualized gain is 6.7%. Nineteen of the twenty cities reported sequential gains and while we are still 29% below the peak reached in July, 2006, three months in a row of monthly gains starts to look like a trend. With the $8000 tax credit for new home buyers in place, we could be drawing future purchases forward. It is probably also true the pipeline is full of foreclosures that have yet to hit the market, and unemployment is high. But historically low mortgage rates and improved valuations might be enough to counter those other negatives. My best guess is there will be a slump in the rate of improvement if the tax credit were allowed to expire.
- Mortgage Applications Slump for 3rd Straight Week
Consumer confidence as measured by the Conference Board unexpectedly fell to 47.7 from 53.4. The "expectations index" also slumped to 65.7 from 73.7. Confidence surveys correlate very well to the stock market movement and the trend in gas prices so we should have had a favorable number. Unemployment and stagnant wages probably are weighing on the consumer psyche. We are well off February's extreme low of 25.3, but we are still below the reading of 61.4 that was registered just before Lehman collapsed. Not to make you feel bad, but the long term average for this measurement is about 95. Ouch!
Mike Ward of Soleil/Ward Transportation reports the labor contract voting is tilting away from Ford as of the other night. Work rules that Ford favors might not make it through a vote of the rank and file. The final tally will be known this Saturday and Ford is expected, says Mike, to report earnings next week. It is hoped the North American operations will come close to breakeven. Mike rates Ford a Buy and has a price target of $10. Please contact Soleil for a copy of the report.