Tuesday, May 01, 2007

ISM and Housing

Manufacturing grew at a higher than expected pace with an ISM number above consensus. While orders are up and inventories down, a high ISM number is less likely to cause a cut in rates. If the bulls are looking for a rate cut, this number will not be to their liking. On the other hand this number indicates that we are not in approaching a recession as the bears would like us to believe. Nonetheless, I expect a pullback in the markets and yesterdays decline indicates a short term change int trend. Perhaps we will get a good buying opportunity later this week or early next.

Sales of existing homes fell to their lowest level in four years. Thereare those that continue calling a bottom in housing. I highly doubt any bottom will occur in housing till late 2008 at the very least. Inventory across the nation is at record highs and builders continue churning out new homes.With an increasing supply and decreasing demand caused in part by stricter lending standards, it will be a long time before supply and demand are in balance. The way things stand, supply keeps increasing with new builds and foreclosures among others while demand keeps falling as lending standards tighten up.

1 comment:

Matt said...