Housing news puts stocks in freefall
Few things are as important to the state of the U.S. economy than is its housing market.
That point was driven home again yesterday, when stocks plummeted in reaction to some typically bad housing news. You can read about it here in this story by the Washington Post.
According to the Post story, the Dow Jones Industrial average feel 80.05 points to 7270.89. The Standard & Poor’s 500-stock index fell 8.24 points to 764.90, while the Nasdaq composite index lost 16.40 points to fall to 1425.43.
What fueled such a dismal Wall Street performance? Blame it on the housing industry.
The National Association of Realtors released new data showing that existing-home sales plunged 5.3 percent in January. That performance was worse than what analysts had predicted. It also market the slowest rate of existing-home sales since 1997. At the same time, median prices for existing homes dropped 14.8 percent in January. The national median home price, which now stands at $170,300, is at its lowest point since March of 2003.
Not surprisingly, the stock market reacted poorly to all this troubling news.
The poor performance of the housing industry also casts doubt on the value of analysts who predict that the housing market will begin to make a gradual recovery in 2010. We’ve all been hoping these optimistic analysts will be proven right. But it’s getting awfully hard to see any light at the end of this tunnel.
As negative as it sounds, I’m starting to wonder if maybe those other analysts, the ones who are saying that we’re still in the early stages of the housing meltdown, aren’t right.
And if they are? If the recovery isn’t going to start in 2010? Well, it’s going to be an awfully tough time for many U.S. residents.
