Housing Boom Or Bust

Strong housing sales is an indication of strong economy. With increase in interest rates, the mortage rates also are up.

Rule of thumb: High mortage rates = Slow housing sale

Pending sales of existing U.S. homes fell 0.5 percent in November but held above the low hit in July, suggesting the housing market is stabilizing.

The Pending Home Sales Index is pointing toward fairly stable home sales in the near future. Home sales climbed the two months after September.

The index covers pending sales of existing single-family units, condominiums and co-ops. A home sale is pending when a contract has been signed but the transaction has not closed.

Shares of homebuilders is all down, and i do not recommend holding it this qtr. Some of the stocks make for good shorts like Toll Brothers (TOL), DR Horton (DHI), Pulte Homes (PHM), Restoration Hardware Inc (RSTO), Home Solutions of America Inc (HSOA)

I am bearish about Real Estate/Construction stocks this quarter, but the second half of 2007 looks more promising for housing.