Ask DrBob Message Board - Msg: 16519822

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Strategies & Market Trends : Ask DrBob

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To: Drbob512 who started this subject	10/17/2001 5:49:34 PM
From: longdong_63	of 100058

9:11 AM ECONOMY TALK: The housing starts data sends a misleading signal about the current condition of the housing market. The data appears to largely reflect past strength in housing demand. There are several indicators that point to a weakening in the housing market. First, lumber prices have been very weak and are approaching a 9-year low. Second, building permits are now at their lowest level since April 1997. Third, mortgage applications for home purchases are near their lowest level in about 20 months (excepting a holiday-related drop at the end of last year). Fourth, just yesterday the National Association of Home Builders reported that their monthly housing market index posted its biggest 1-month decline since they began conducting the survey in 1985. Fifth, both consumer confidence and income growth--the two main pillars of a strong housing market--are weakening. By themselves, each of of these indicators has historically been tightly correlated to the housing data. Combined, these indicators send a powerful signal on the state of the housing market. The indicators currently signal weakness, not strength.

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