Market Remains Torrid Through Heat of Summer

Market Remains Torrid Through Heat of Summer




Market Analysis

Weakness in Stocks Seen Eventually Dampening Housing Market

Washington, DC The stock market, still undergoing extreme and unsettling ups and downs as of late July, may eventually prove to be a drag on housing if the current volatile pattern continues, the National Association of Home Builders predicted.

The Washington, DC-based NAHB said last month that recent problems with the stock market are "not likely" to have a positive effect on housing demand, which has remained almost remarkably resilient through even the worst of the recent economic downturn.

"The stock market . . . is both an influence on, and a barometer of, consumer confidence," the NAHB observed. "Although some people see the problems in the stock market as making housing look better as an investment, the net effect of stock market weakness on housing demand is not likely to be positive."

The NAHB pointed to shrinking consumer confidence and fears of shrinking personal wealth wrought by steady stock market losses over the last 2+ years.

The trade association added that its most recent nationwide survey of home builders generally did not pinpoint stock market weakness as a factor affecting demand or sales expectations for new homes.

"But, where the local economy depends on troubled corporations such as Worldcom, the possibility of job losses has been a factor," the NAHB noted.