July 27, 2009
July 27, 2009 by admin
The stock market is trading sideways, despite a spectacular report on the housing market. The market is struggling to find positive ground on Monday, following an impressive week on Wall Street as equity investors sent the stock market past the 9000 point level as corporate earnings and economic news fueled a rally in the broader markets. Today, the market has struggled to find a direction, as investors appear to be cautiously moving in and out of the equity markets, trying to determine the markets next course of action after the recent rally.
The market did get a solid boost early this morning when the new home sales report for the month of June was released. The report indicated that new home sales have move up over 10% last month. The numbers were the best figures for the new home industry in the last nine months. This report, combined with the existing home sales report released earlier this month, have some predicting that the housing market has finally reached a bottom point. The real estate market is certainly being assisted by the government tax rebates, abundant inventory and historically low mortgage rates. The month of June saw a spike upward with mortgage rates as the markets grew concerned that the U.S. debt load was growing too large and too fast. This upward spike briefly sent interest rates on thirty year mortgages up to six percent. The spike upward, and subsequent media coverage could have pushed more buyers into the market and moved some of the “on the fence†buyers into the market. There has been much debate and coverage on the housing market bottom and the media speculation certainly has led a percentage of home buyers to continue to try and wait to time the bottom. The recent news, could be a significant boost towards ending this trend and pushing more buyers to act aggressively. The housing market is still under stress from home foreclosures and the struggling U.S. job market, but an improvement in housing would be a great boost to consumer confidence.
The mortgage market has felt a bit of pressure from the sharp increase in equities over the last two weeks. The yield on the ten year bond, has move from 3.35% past 3.71% on Monday. This has pushed long term interest rates up by over .375% during this period. Most national mortgage lenders are offering thirty year loan terms at or above 5.5% currently. Long term rates have been rising in lockstep with the increase in the equity markets as well as the upward move of oil. The trading range for the ten year bond to be concerned with is the 4% level. The market has shown some resistance, once it approaches the 4% level for ten year bonds, which has helped to keep mortgage rates below six percent.