That’s according to Nicholas Yulico for The Street. He says that one problem has to do with the 10-year Treasury note which has
not fallen as much as the short-term Fed-rate.
Right now the 10-Year
note is at 3.76%. Mortgage rates are tied to the 10-year Treasury note,
so homeowners have not seen much lower rates. The average 30-year
mortgage is at 6%, down from 6.38% back in September 2007.
SPDR S&P Homebuilders (XHB) has fallen 6.4% despite the three rate cuts, close to the S&P 500 at a 6.2% decline.
XHB and the iShares Dow Jones US Home Constuction (ITB) are down nearly 3% midday today. A number of homebuilder stocks are trading significantly lower, including Standard Pacific Corp (SPF), which is 5.1% of ITB. Hovnanian Enterprises Inc. (HOV) is also down, and it makes up 6% of XHB. Year-to-date, XHB is up 14.9%, while ITB is up 13.4%.
Ron Peltier, the CEO at Warren Buffett’s Homeservices of America real estate company, said today that the housing market has steadied and is ready to bounce back.
He put much of the blame on lenders who handed out mortgages that didn’t require documentation about assets or income, CNBC reports. He also noted that housing prices are still within 8% to 10% of their all-time highs and that as the market normalizes, stability will return.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.