Another week, another drubbing. Last week’s big stumble from the S&P 500 rekindled a wave of selling that got going in a big way three weeks ago, but paused two weeks ago. But, now down nearly 10% from its peak hit in early October, one can’t help but wonder if the sheer speed and scope of the beat-down has left stocks ready to bounce. There are several things about Friday’s action that suggest this could indeed be the case.
We’ll take that detailed look at the market below, as always. First though, let’s run through last week’s economic reports and preview this week’s economic news.
Economic Data
Not a lot of economic news for last week, which might be for the best anyway. Between a wave of earnings reports, a major market meltdown and plenty of political drama, most of it would have gone unnoticed anyway. It’s worth a look-back either way.
Following the existing-home sales report from two weeks back, last week we got a tally of September’s new-home sales pace. Not surprisingly, though slowed too, further gelling a slowdown in the over real estate market.
New and Existing Home Sales (Annualized) Charts
Source: Thomson Reuters
So far that slowdown has been contained to just real estate, and hasn’t infected other parts of the economy. Nevertheless, a rebound on this front would be welcomed with open arms.
It’s possible the issue really is one of affordability.
It’s not data we look at all that often, only because it’s never any newer than two months behind. But, in that we get the FHFA Housing Price Index update last week and will get the Case-Shiller Home Price Index report for August this week, it’s worth a look here and now just to make a key point – homes, on average, cost more now than they did at the height of the real estate craze in 2007.
Home Price Index Charts
Source: Thomson Reuters
Given how out of control things were then – when nobody cared or thought twice about it – and given how cautious consumers have been this time around, this is telling. And, it’s not like we can chalk all of it up to inflation.
