NEW YORK ( TheStreet) -- We have been seeing improved housing data over the last two months, but the FOMC threw cold water on the housing market Wednesday when Fed Chairman Ben Bernanke hinted that quantitative easing could begin to be unwind in mid-2014. U.S. Treasury yields and hence mortgage rates moved higher.
My benchmark for the housing market is the PHLX Housing Sector Index (HGX) (177.41) which is the first close below its 200-day simple moving average since Dec. 20, 2011. On May 20 the housing index set a multi-year high at 210.01 up 22.6% on the year. Currently the index is up just 3.6% year to date, and is 15.5% below the May 20 peak.
The National Association of Home Builders Housing Market Index rose eight points to 52 in June, above the neutral 50 mark for the first time since April 2006. This is a clear sign that homebuilders are seeing improved demand for newly-built single family homes.
The NAHB projects that total housing starts would top the million mark this year for the first time since 2007. Part of the renewed demand for new homes is a low inventory for existing homes.