Seeking Alpha
Value, contrarian, bonds, long-term horizon
Profile| Send Message|
( followers)  

In a note to investors, a well-regarded strategist on the equity sales desk at a major sell side firm put up the following two Bloomberg charts next to each other.

The two charts reflect different time frames but are from related data sets. The first chart is a long-time series dating from 1963, the seasonally-adjusted annualize rate of new home sales. You can see home sales falling off a cliff into this past recession.

The second chart is a three-day chart of the ITB, the iShares home construction ETF which consists mostly of homebuilder shares. The homebuilders were crushing yesterday as new home sales in June came in up over 23% month-over-month. Of course, May was a record low, the slowest ever in 46 years of data.

New home sales rebounded in June from the record low hit the previous month but remained sluggish.

New home sales increased 23.6% to a seasonally adjusted annual rate of 330,000 last month, up from an downwardly revised 267,000 in May, the Commerce Department reported Monday. Sales year-over-year fell 16.7%.

The June sales pace is the second slowest ever on record since the Commerce Department began tracking the data in 1963.

Notice the last line where it says the pace is the second slowest ever.

But it was slightly better than the annual rate of 310,000 economists were expecting, according to a consensus survey by Briefing.com.

If that doesn’t tell you people are in a bullish frame of mind, data be damned, I don’t know what will. Even David Rosenberg is recounting 17 reasons to be bullish.

Source: New home sales rebound 24% – CNN Money

Source: Chart of the Day: Homebuilder Stocks vs. New Home Sales