Existing home sales, which will be reported on August 21st, have gained ground in the previous three months just as the pending home sales predicted. The National Association of Home Builders Market Index, which gauges sales, expectations and traffic, has more than doubled from a low of 8 in January to the current reading of 17. And New Home Sales have risen the last two months. The June reading of +11% was the largest month over month increase since December of 2000.
There are many reasons for the jump in housing data including lower prices, attractive mortgage rates, and the tax credit for first time homebuyers. But whatever the reason these are very encouraging signs for the devastated U.S. housing market that perhaps we have started to find a bottom. This is no more important than in the home construction stocks. Since July 13th, the homebuilders are up a very healthy 34%, and since the March bottom in the S&P 500 the stocks have risen over 100%. Certainly this has contributed to the overall sentiment in the market and helped break 1,000 on the S&P 500!
