Record Inventory of New Homes

This is another example of fundamentals being a lagging indicator.  We have been shorting and covering multiple legs of the down trend in housing stocks for a few months now, as company after company beat earnings estimates yet saw its stock price fall.  Wha happen?  Same things that usually happens to beginning investors or anyone trading on fundamentals alone.  They usually get burned at "sell" time, because they don’t get their "fundamental" signal until stocks are well off their highs.  Why?  Because stock prices are forward looking and fundamentals are rearward looking.  Sounds simple, yet many an "investor" does not understand this most basic of points.  Sell primarily on the technicals. Cheers!

WASHINGTON (MarketWatch) – Inventories of unsold new homes rose to a record level in September as sales have slowed in the past two months from a record pace in the summer, Commerce Department data released Thursday show.

Sales of new homes in the United States increased 2.1% in September a seasonally adjusted annual rate of 1.222 million after an 11.6% slump in August, the Commerce Department estimated Thursday. Read the full report.

Sales in September were flat from a year earlier.

Meanwhile, inventories of unsold homes on the market increased to a record 493,000 in September, representing a 4.9-month supply at the current sales pace, the same as in August. It’s the highest inventory-sales ratio since late 1996.

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