Housing

by Larry Levin

In addition to Tax-Cheatin'-Timmy's usual drivel in front of a House panel today, we received two more data points on housing. Housing, in case you had forgotten because the market sure has, is an incredibly important piece of the US economy and it is still very bad. Existing home sales data and housing price data points were released Tuesday morning.

The first to be released was the existing home sales report. Although it was not as bad as the horrific prior month's data, it was another negative print showing sales dropping -0.6%. Single-family homes, which makes up the vast bulk of sales, fell 1.4% in the month to a 4.37 million rate. Distressed sales made up 35% of total sales and all-cash sales, reflecting tight credit and low prices, are extraordinarily high at 27%.

Moreover, supply is building. Housing supply now stands at 8.6 months vs. 7.8 in January and 7.2 in December, which is the steepest in the last 20 years. Hmmm, what happens to price when supply radically increases? Oh well, thank goodness this no longer matters to the market.

The FHFA house price index fell yet again last month. Here is what Bloomberg said - Home prices for federal agency sponsored mortgages continued to decline in January. Seasonally adjusted U.S. home prices declined 0.6 percent in January after a revised drop of 2 percent in December, according to the Federal Housing Finance Agency's monthly House Price Index. The index was down 3.3 percent when compared with last year.

The FHFA House Price Index is for purchases only and is based on mortgages either originated by federal housing agencies or bundled by them for the secondary market. Housing prices appear to be under new downward pressure as foreclosures are rising and there is no surge in demand as earlier in the summer and fall with the early effects of tax credits for first-time home buyers. Tax credits were still in effect in December but the boost in demand has waned.

Oh well, thank goodness this no longer matters to the market.




Previous Day's Trading Room Results:

Trade Date: 3/23/10

E-Mini S&P Trades*
(before fees and commissions):


1) 80% sell @ 10:47am at 1162.00 = -.75 & -.75 (2 lot)

2) IDVA sell @ 12:19pm at 1164.00 = -.50 & -.50 (2 lot)

3) Algorithm positions (8)

4) "Reading the Tape" positions (6) ...combined Secret's, Algo, & "Reading the Tape" total...+1.50



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