On deck this week: Housing ‘n’ earnings

If you own a home, you’ve probably become addicted to real estate porn. This is not, as you might suspect, movies about bodice-ripping real estate agents and muscular roofers. Instead, it’s any of a number of real estate sites, such as Zillow, that let you find out what your neighbors are asking for their homes, what they paid for it, and, sometimes, what their taste in kitchen flooring is like. “Really? Bamboo? Oh. My. God.”

We’re fascinated by housing in part because we’re Americans, and owning a home is still a part of the American Dream. And we’re also convinced, despite compelling evidence to the contrary, that real estate is the road to riches, even if tapping those riches means living in the woods.  This week, there’s plenty of news coming about housing, and it’s worth paying attention to, even as companies continue to trot out their third-quarter earnings.

housingWhy look at housing stats when you can have more fun gasping at your neighbor’s marble Jacuzzi? Housing is a powerful engine for the economy. When you build a home, you’re employing dozens of people in well-paying jobs, racking up enormous purchases in timber, wire, and shingles, and setting yourself up for substantial further purchases for furniture, housewares and lawn gnomes.

Furthermore, the housing industry has yet to recover from the 2007-2009 financial crisis.  New housing starts are at 1993 levels. And the median home price — half higher, half lower — has yet to break its 2006 peak.

This week, we’ll get several views of the housing market, starting with the Housing Market Index from the National Association of Home Builders, released Monday. The index is based on a survey of the association’s members, and it has been fairly chipper lately. The supply of new houses is low, as are mortgage rates — now averaging 3.82% for a 30-year mortgage.

Tuesday, the Bureau of the Census releases its housing starts data. As you can see, it still has a long way to go before it climbs out of its deepest hole since the series started.

Thursday comes existing home sales from the National Association of Realtors. Calculated Risk, one of the best blogs on housing and the economy, thinks the number will be stronger than most economists predict. For home price voyeurs, The Federal Housing Finance Agency House Price Index gives a read on how single-family home prices are doing. They have risen about 6% the past 12 months.

Long-term investors should keep their eye on housing data, because it’s so important to the economy. But it will be earnings that catch the market’s eye first. It’s peak earnings week, with 110 companies reporting:

  • Monday, Haliburton will likely release a woeful earnings report; IBM, Morgan Stanley and Broadcom are also on deck.
  • Tuesday: Yahoo!, Verizon and Lockheed Martin
  • Wednesday: Abbott Labs, American Express, eBay, Boeing, General Motors, and Texas Instruments
  • Thursday: 3M, Amazon, Caterpillar, Southwest Air
  • Friday: Procter & Gamble, State Street, American Airlines

So far this year, earnings haven’t been great. They’re down 5.14% from the third quarter of 2014, the first year-over-year decline since 2009. It will take a lot of happy housing news to counter any major earnings disappointments this week.

 

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