Dow -730

The stock market is having a rough Monday. The Dow has been down as much as 730 points, which is a little over 2.5%. The market is on pace for its worst day since early September. The Nasdaq and S&P 500 are also down but not as much.

There’s been a recent surge in new coronavirus cases, the so-called “third wave.” The U.S. topped its single-day record from July. The seven-day average is running at over 68,000 new cases. Over the weekend, Mark Meadows said that the U.S. will not get control of the pandemic. Travel-related stocks are down big today while the “lockdown stocks” are doing well.

There’s also pessimism that no stimulus deal will be reached until after the election.

This morning’s new home sales report for September showed a decrease to 959,000 (that’s an annualized number). That’s down 3.5% from August, but it’s up 32% from last September. The supply of new homes is still below normal.

I also wanted to comment on Friday’s existing-home sales report which was very good. In fact, it was the strongest such report in 14 years.

Sales of existing homes rose a higher-than-expected 9.4% in September to a seasonally adjusted annualized rate of 6.54 million units, according to the National Association of Realtors. Sales were up 20.9% annually.

Sales could be more robust if there were more homes available. The inventory of homes for sale fell 19.2% annually to just 1.47 million homes for sale at the end of September. At the current sales pace that represents a 2.7-month supply. That is the lowest since the Realtors began tracking this metric in 1982.

Also, home prices are surging:

Tight supply continues to push prices higher. The median price of an existing home sold in September was $311,800, a 14.8% gain compared with September 2019. That is a new high for this series, dating back to 1968. It is also an all-time high when adjusted for inflation.

“Americans are splurging on spending for housing,” said Lawrence Yun, chief economist at the NAR, noting that they are also spending more on home improvements at retailers like Home Depot and Lowe’s. “Home prices are simply rising too fast.”

Posted by on October 26th, 2020 at 12:16 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.