From Floyd Norris, the chief financial correspondent of The New York Times and The International Herald Tribune.
Is the housing recession nearing an end?
You wouldn’t know it from the new home sales numbers that came out today, which are unsurprisingly dreadful. But investors seem to believe that things are looking up, thanks to the combinantion of Fed rate cuts and an increase in the size of loans that can be sold to Fannie Mae and Freddie Mac. The economic stimulus package being considered in Congress would raise that limit to $730,000 from $417,000.
The S.&P. 1500 homebuilder index is up an astonishing 40 percent since it hit bottom Jan. 8, with all of the 15 stocks in the index up at least 11 percent. (The index is still 67 percent below its peak in 2005.)
...
1. Regionally, the northeast is the least important part of the country for new home sales, but it is also the strongest. There were 65,000 new homes sold in that region last year, up 3 percent from 2006. But the other three regions were all down at least 26 percent, with the west (California, there you go) off the most at 32%.
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Stock prices are supposed to anticipate the economy. Let’s hope this forecast is accurate.
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