At 10:00 a.m. ET today, the National Association of Realtors will come out with its existing home sales numbers for last month. The report should help us get a clearer sense of activity in the housing market and economy.
In December, existing-home sales rose a seasonally adjusted 5% from the previous month, or 3.6% year over year. The market is expecting to see the figure edge up slightly to 4.63 million in January. We'll also get an update on how large the housing inventory is, and what is the median price.
Obviously, the housing glut has been an issue, not just for homebuilders, but also for the financial system and economy at large. However, we've been seeing fairly good home-sale numbers since late last year. A continuation of that trend would obviously be good news for troubled names like Bank of America
But the rest of the Dow
In ordinary recessions, the Federal Reserve can lower interest rates to help restimulate economic growth and fuel recovery. The recent recession was so severe, though, that the models the Fed uses prescribed deeply negative interest rates. Obviously, you can't cut rates below zero, so that's a problem. But another unusual issue that hasn't gotten as much attention (though the Fed and White House have begun to focus on it more in recent months) has been the fact that, with so many banks too weak or too reluctant to extend credit, and so many homes underwater, mortgage activity was weak. And if people aren't buying homes, they're not getting the full benefit of low interest rates. That's a drag on the recovery.
Residential mortgage REITs like Annaly Capital
For the rest of the market, though, declining levels of household debt, more available credit for creditworthy borrowers, and cheaper interest payments can't come soon enough. And today we'll get to see another piece of how our tentative recovery is progressing.
For a look at which financial stocks could be winners today, check out "The Stocks Only the Smartest Investors Are Buying," which will give you the scoop on some excellent bank stocks that look like the kind of investments Warren Buffett might have made in his earlier years. I invite you to read this special report for free.