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Strategies & Market Trends : Commodities - The Coming Bull Market
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To: NOW who wrote (1001)12/17/2001 3:57:08 PM
From: Stephen O  Read Replies (1) of 1643
 
In December, the Homebuilders' Market Index bounced back 8 points, much more than expected.

This should buoy construction stocks and building materials firms.

However, the report was more gasoline on the bond market fire.

One of the more reliable surveys of economic activity sent a very positive signal Monday. The National Association of Homebuilders said their markets were reviving, with sales jumping 8 points to 60, expected sales rising the same amount to 64, and traffic in model homes up 8 points to 46. That brought sales activity back to near pre-9/11 levels.

Mortgage rates dived from 7.13% in July to just over 6.6% in Oct/Nov. We think this rate decline helped housing significantly. By mid December, although builders' financing probably still reflected November rates, the market had driven spot mortgage rates back above the July level. Viewing the bond market today, mortgage rates won't stop there.

Holding on to the recovery in home sales is thus problematic. But there's no question that the builders are sending a signal that low mortgage rates would work, if only the Fed could produce them on a lasting basis next year.

Homebuilders' Index
Dec Nov Oct July Dec00
Overall 57 49 47 56 58
Traffic 46 38 33 40 42
Mortgage Rates 7.15e 6.66 6.62 7.13 7.38
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