Pending home sales was reported today to be at the highest level in over a decade. The strongest regions are the west and the south. This extremely strong report along with the very strong new home sales report from Tuesday show the housing market is much stronger than previous thought. A strong housing market is very bullish for the economy in general. It shows that buyers are comfortable making a large purchase which reflects positively on just about all other spending categories as well as construction.
The NAR attributes the strength in the housing market to low mortgage rates and a strong job market. Mortgage rates are hovering around all-time lows, below 4%. The job market has been good as far as the number of jobs created, but there are some complaints on a lack of wage growth. This was a very bullish report. My favorite housing plays are Apogee (APOG) and Acuity (AYI). Apogee manufactures glass exteriors for sky scrappers. Acuity makes LED lighting sold at Home Depot ($HD).
Michael Grove, CFA