Wednesday, April 1, 2009

Home Prices

According to the financial press, a large part of today's equity rally was due to the pending home sales data. The index is a measure of contract signings and today's reading came in at 82.1 versus a street forecast of 82. The previous reading was 80.4, so the uptick was the reason for celebration. I guess the message is, nobody cares if these are the two lowest readings in the last thirteen months.

The graph below tracks the Case/Shiller Home Price Indices. Annualized price drops have yet to let up and the index now stands where it was back in the Fall of 2003. The equity market can continue to pick and choose the data it reacts to, but until equilibrium is attained in the housing market, the economy will cease to rebound.

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