US housing data spooks the market

US housing data spooks the market
Published: 29 October 2009

US stocks tumbled in a broad sell-off on Wednesday, sending the benchmark S&P 500 lower for a fourth straight day, after weak data on new home sales heightened concerns about the pace of the economic recovery. "The housing data definitely created an additional leg down in the market," said Mike O’Rourke, chief market strategist at institutional brokerage firm BTIG in New York. "A lot of people realize that we’re correcting right now and are being cautious."

Among home builders, Beazer Homes slumped 11.6 percent to US$4.26, while D.R. Horton lost 5.8 percent to $11.12 and Toll Brothers declined 5.5 percent to $16.95.  Sales of newly built single-family homes unexpectedly fell 3.6 percent last month, according to a Commerce Department report. Seperately, data from the Mortgage Bankers Association showed demand for mortgages has fallen for the past three weeks.

The housing data was an additional hurdle for a market already buffetted by uncertainty about the future of the government’s US$8000 home buyer tax credit. The tax credit for first-time home buyers would be extended until the end of April and expanded to cover repeat buyers under a deal reached by key senators, sources familiar with the plan said on Wednesday. The housing data underscored the stickiness of the real estate downturn amid a tough job market, tighter lending and sliding home values.