As Real Estate Goes, So Goes The Economy May 2010
In recent days and weeks, investors were busy watching the Euro and bailouts of severely struggling economies like that of Greece.
Investors had been almost wholly concentrating on whether steep budget cuts to manage rising debt in European countries would slow a global economic recovery in the coming months. This negative news led the stock market to steep declines.
However, they may have been missing a more important indicator of the health of the economy. That indicator is the real estate market.
The Commerce Department reported that sales of new single-family homes rose 14.8 percent in April to an annual rate of 504,000 units. That followed a 29.8 percent rise in March that was the biggest increase in 47 years. The latest gain is well ahead of estimates.
Also, reports of gains in the purchase of durable goods, which includes appliances and home furnishings, was positively influencing investors. With an increase in home purchases, durable goods purchases will increase.
The positive reports on these hard goods and home sales has led to a rebound in the stock market.
This may have a slight impact on interest rates as more investors move from bonds to stocks, but not significantly enough to slow the recovering housing market.
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