[note: the DJUSHB Dow Jones Home Construction Index has hit a new low on the day since I posted this report – it’s down almost well over 2% nearly 3% now] Despite what seems to be an inexorably rising stock market, the homebuilder stocks continue their negative divergence from the direction of the general market. In fact, the homebuilder stocks dropped over 1% at today’s market open despite another unexplained ‘pop’ in the S&P 500.
The message of the market is unmistakable: the housing sector is tanking (click to enlarge).
This is despite the fact that 30-yr mortgage rates have come down to their lowest level in a year. That fact that buyers are disappearing is reflected in today’s mortgage purchase applications report from the Mortgage Bankers Association which showed another 2% drop in applications files vs. the previous week and a 12% plunge from a year ago.
This post was published at Investment Research Dynamics on September 3, 2014.