No Shelter


Despite the lowest mortgage rates in decades, confidence in a housing rebound is still scarce.

According to The National Association of Home Builders, the monthly index of builders’ sentiment fell to 13 in August, the lowest reading since March 2009. Readings below 50 indicate negative sentiment.

Problems in the housing market reach other parts of the economy. The dearth of new-home construction — home construction fell to an eight-month low in June — impacts employment. More important, the inability of current homeowners or new buyers to take advantage of low mortgage rates — either because of the lack of equity in their homes or stringent credit requirements — affects consumers’ disposable incomes and spending.

When will housing rebound? The stock market is anticipatory, so homebuilders will likely see their stocks outperform the broad market perhaps three to six months prior to evidence of a rebound. The SPDR S&P Homebuilders ($14; XHB) exchange-traded fund has underperformed the S&P 500 Index over the last 24, 12, six, and three months, so Wall Street does not appear to be expecting a rebound anytime soon.

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