It has been a dismal couple months for homebuilders as poor data have spurred worries of another dip in housing. Following a poor existing home sales number on Tuesday, yesterday’s new home sales data was even more disappointing. New home sales in May fell to a record low of 300,000 – far below expectations of 430,000 – and down nearly 33% from a downwardly-revised April number. Sales in the West region were particularly weak last month, dropping 53% from the prior month and falling 43% year-over-year.
Also frustrating for the housing industry: low interest rates haven’t spurred demand for mortgages. Despite 30-year mortgage rates falling to their lowest levels since May 2009 at 4.75%, mortgage applications declined 5.9% in the past week (as reported by the Mortgage Bankers Association yesterday). Refinancing applications dropped 7.3%, while mortgage applications for home purchases fell 1.2% in the week. The Mortgage Bankers Association’s purchase index now sits just off a 13-year low. Additionally, since the recent expiration of the Federal home buyer tax credit less than two months ago, the index has fallen in six of the last seven weeks.Take a look at the drop in the major homebuilding stocks (all of which are at multi-month lows) since the tax credit’s expiration on April 30:
The hefty declines haven’t been limited to just the builders. Lumber has plunged nearly 37% in just over seven weeks and is on pace for its worst quarter in 17 years.
Additionally, many housing-related stocks (construction materials, home improvement retailers/product makers) have also been hit hard over the past couple of months:
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