Hopes for an 11th-hour rally were dealt a blow at 10 a.m. EST Monday when two pieces of economic data came in weaker than expected. Existing-home sales fell 3.5% in November, and the Chicago PMI Index dropped 3 points to 51.3.
November home sales fell to a seasonally adjusted rate of 5.56 million units, according to the National Association of Realtors, below estimates forecasting a 5.63 million unit pace. Inventories rose 0.8% to 2.34 million units, an estimated five-month supply given current prices.
Shares of homebuilding stocks slumped on the news.
dropped $1.29, or 2.5% to $51.10,
is down $1.39 at $59.20, and
has slipped 2.8% to $19.70 a share.
Despite the decline, many industry analysts maintained a positive outlook. "The level of activity is still the sixth-highest ever," said David Lereah, NAR's chief economist. He also pointed to the fact that the median sales price for existing homes jumped 9.7% in November and are up 7% year over year, the largest increase since 1980.
"The housing market is still strong. The supply/demand equation coupled with low interest rates should create a floor in both stock and home prices over the next few years," commented Jim Wilson, an analyst with JPM Securities.
Traders were also trying to digest the Chicago PMI Index, which fell to 51.3 in December, nearly 2 percentage points below the 53 consensus estimate. Still, economists noted that the index is holding above 50, considered to be the dividing line between expansion and contraction. "This shouldn't be of great concern. The manufacturing sector appears to making a slow but clear turn," said Doug Lewis, an economist with Dearborn Partners, a Chicago based research frim.
The broad market measures remained mixed in quiet holiday trading with the
up about 15 at 8318 and the
off fractionally at 875.