Don’t blame weakness in home sales on weather conditions. The National Association of Realtor’s pending home sales index has fallen for eight consecutive months. In fact, you can trace the trouble directly back to when 30-year fixed mortgages pole vaulted from 3.5% to 4.5% in the summer of 2013.

The rate-sensitive home-building segment has been able to cling to a technical uptrend in spite of increasing uncertainty surrounding home affordability. Yet, the SPDR S&P Homebuilders ETF (XHB) is down roughly 5% in 2014 and straining to keep pace with the broader market.

The financial media tend to focus on signs of economic strength. For example, commentators and analysts celebrated U.S. economic output hitting 2.6% for the final quarter of 2013. Lost in translation is the reality that GDP for all of 2013 came in at a below-trend 1.9%, down substantially from 2.8% in 2012. Equally worrisome, the U.S. hasn’t come close to sniffing the average output of 4% growth in the 1990s.

Until recently, declines in home sales have not mattered to bullish advocates for stocks. Nor have investors been bothered by declines in the percentage of working-aged individuals in the workforce and declines in purchasing power due to stagnant wages. That said, the first quarter underperformance of consumer-oriented ETFs like SPDR Select Sector Consumer Discretionary (XLY) may be an indication of genuine concern. The remarkable drop-off is demonstrated in the XLY:S&P 500 price ratio below.

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