More Housing News

When we look at the market trade this week, it is a wonder that anyone is paying any attention at all. Volume is light even though the end of the quarter is upon us and some of those funds need to show good stocks in their portfolio. Between short sellers covering (buying stocks to cover their position) and window dressing, there doesn't seem to be much to talk about in the stock market...

So, we will again turn our attention to the housing news that came out on Thursday. The first news was the new home sales and they were dismal at best. The WSJ headline reads New-Home Sales Hit 7-Year Low and this appears to be on page A3 of Friday's paper so it is buried deep. The number was much less than expected and the past two months were revised downward, like we said, dismal.

This might have been good news for the stock market but it is pretty overbought at the moment and can't take advantage of such good news. (you still recognize sarcasm, we hope) The WSJ article makes a comment about the weekly claims for unemployment saying they were down which "indicated the labor market might be in better shape than was suggested by a report, released earlier this month, showing payrolls in August fell for the first time in four years."

This kind of journalism is typical in a bullish environment. We only have to wait a week until next Friday when we see what the jobs' report is for September.

In other housing related news, KB Home reported a loss for the quarter of 46 cents versus last year's $1.90 profit.

According to Bloomberg, the new CEO of Fannie Mae, Daniel Mudd said the housing slump will last beyond next year, dragging down home prices and increasing credit losses. Mudd would like the government to allow Fannie Mae and Freddie Mac to help out, "Let's loosen this up a little bit and give us a chance to respond in a market where all the other investors have gone away. We're not the whole solution to this problem but we can certailnly play a part." He would like an increase in Fannie's market cap of 10% when OFHEO, Fannie Mae's oversight body, said maybe 2%.

Over in the credit market, mortgage rates did exactly what we thought they might. The fixed rate mortgages went up some and the ARM's went down. What's a buyer to do???

Meanwhile, a funny article about Chuck Norris's tears providing some liquidity brings some comic relief. We thought you might enjoy it.

The market gets closer and closer to the edge and we seem to be waiting forever but when it goes, it will be something to behold. This little low volume rally is being touted as a great thing by all those bulls who Believe in the magic of the Fed. Stay focused.