THOUGHTS ON THIS MORNING’S DATA
More signs of economic stability this morning, though signs of real sustainable growth remain in doubt. Existing home sales were in-line with expectations at 5M. This was flat compared to last month and in-line with the overall trend of the last year. Demand for existing homes remains surprisingly tepid despite the soon expiring tax credit for new buyers. Supply in the housing market continues to build and increased to 8.6 months vs January’s reading of 7.8. While the stability is a good sign, the increasing supply is a negative. The sustainability of the housing recovery is in very real jeopardy.
In related news, KB Homes reported a larger than expected loss, but said they are seeing some stability in the housing market. Overall, however, it remains too early to call this a recovery:
“The operating environment for the homebuilding industry is better today than last year at this time,” said Jeffrey Mezger, president and chief executive officer. “Encouraging data in recent months suggest that a number of housing markets may be stabilizing or starting to rebound, though we do not yet see, in many respects, a sustained nationwide recovery. While the pace is likely to be uneven in the months ahead, we currently expect housing market conditions to follow a generally positive trajectory throughout this year and into 2011.”
Retail sales were again strong this morning according to Rebook and ICSC. Part of this is due to seasonal strength and the early Easter pulling sales up a week early, but the consumer has definitely been more eager to spend some money in recent months. Whether or not this is a good thing remains debatable, but the market seems to like it for now as stocks remain buoyant following the news.
