Well, that’s comforting, the new home sales were reported to be Up 4.6% in May. At the same time, the home builder Lennar announced, like so many others in the home building industry, that they were experiencing softer market conditions and a pullback in demand. How do those two reports match up? We did see one explanation of it, that the home builders are trying to sell inventory and reduced prices to do it. That could make some sense but the two articles taken together seem suspect.
Tuesday brings sales for existing homes which is a much bigger proportion of home sales. It does tend to be a lagging indicator compared to the new home sales. As we have indicated here in the past, new home sales are reported as soon as the purchase order is signed while existing home sales are not reported until closing, which is much later. The numbers did not scare the market as there might be some general disbelief in them.
Trading has been very subdued over the past couple of sessions with volume barely registering on the scale. To be fair, we have seen lower volume during the past year. Low volume is not a bullish sign and we are coming up on the end of the quarter. It’s almost eerie as we seem to be waiting for the Fed’s announcement on Thursday [sorry, we had the date wrong in Sunday evening’s post]. One article said that if the Fed does raise a half a point, the market would tank for sure. We are not so sure, one, if the Fed would raise a half point and, two, if they said it was the time to pause, the market would be pretty happy. Monday’s housing numbers certainly don’t argue for “weaker” economic data in order to pause.
Tuesday also brings us some consumer confidence numbers and the Richmond Fed manufacturing index, neither of which should be market moving, why?...because the Fed is going to be telling the market what to do on Thursday.
Be careful out there…
Dow Industrials: 11,045.28 +56.19