David Sims'  Instablog

The overall market may be sinking, but Fannie Mae (FNMA.ob) common stock appears to be unlocked from weeks of stagnant trading. Already up over 5% this morning, the stock appears to be moving the opposite direction of the overall market. The Dow has collapsed over 200 points this morning.(click to enlarge)

With Obama's relection he is now free to move forward with a plan for housing, which may include an AIG-style restructuring, similar to the one suggested by Jim Millstein, former Treasury official and architect of the AIG bailout.

AIG stock has recently stumbled, but the Treasury is already at a break-even point and expected to sell their remaining stake by the end of the year. This should create an opportunity to move on with ending the GSE bailout.

Disclosure: I am long FNMA.OB.

Additional disclosure: Long Fannie Preferred stocks.

The Case Shiller 20-City Index continued to show gains for June, rising 1.2% versus the prior year and 6.9% from the prior quarter.

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Atlanta registered a year over year decline in home prices of 12.1%, along with five other cities. The rest of the 20 cities in the index reported gains, with the largest gain going to Phoenix.

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The National Association of Homebuilders (NAHB) released the NAHB Housing Market Index this morning with a reading of 37. Analysts had expected that the index would remain unchanged from last month's reading of 35. In the prior period, confidence rose more than expected as well.

"From the builder's perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening."

Homebuilders, realtors, and analysts are reporting increasingly good news recently with home prices rising year-over-year. Home inventories are dropping and confidence among builders is rising faster than expected.

Part of the reason for the surge in housing is historically low mortgage rates, which have been propelled by the Federal Reserve's Operation Twist program. Currently, the ten-year Treasury yields about 1.75%, but it has been climbing steadily off of lows near 1.39% in July. As a result, 30-year fixed rate mortgages have also gotten more expensive after touching the lowest rates ever recorded in July.

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Meanwhile, the fallout from the subprime era continues as banks get additional repurchase requests from the Government Sponsored Entities (GSEs). Bloomberg reported this morning that $84 billion in repurchase requests have been recorded and sent to banks like Bank of America Corp.(BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), and Citigroup Inc. (C).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.