Housing News

How Home Sales Move the Stock Market

Property market influences investor confidence

Economic and political news can highly influence the stock market. For example, the recent Dubai debt repayment fiasco shook global indices and had many investors getting worried about the future of commercial trade. However, not all news can disturb the market and leave negative impacts. Government bailout announcements the past year made investors relaxed amid a series of bad news related to the recession.

Before the end of the year, the National Association of Realtors (NAR) released the Existing Home Sales data and reported improvements in the real estate industry. Sales jumped by 7.4 percent which remains as the highest sales since February 2007. NAR chief economist Lawrence Yun states, “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline.”

The results were welcomed by stock market investors too well. CNNMoney reports, “Stocks opened on an upbeat note after a government report showed the economy grew in the third quarter, although at a more tepid pace than forecast. The advance gained steam after an industry report showed sales of existing homes rose in November to the highest level in three years.”

Market fluctuations that reflect positive and negative economic and political news create commotion on a temporary basis until things smoothen out. This just goes to show how home sales trigger successive spending on design materials, appliances, construction improvements, etc. and can create a significant effect on investments at a larger scale.

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