Housing Market Recovery Still Weak (DRH, WFC)
February 23, 2010 11:11 AM
The S&P/Case-Shiller 20-city index on Tuesday showed a mixed recovery in the housing market.
The 20-city index declined 0.2 percent in December and had an annualized drop of 3.1 percent. Analysts were expecting prices would be unchanged for December and down 3.2 percent annually.
On a seasonally adjusted basis, however, home prices in the 20-city index rose 0.3 percent in December, which was more than anticipated.
Increased foreclosures and unemployment hovering near 10 percent will likely lead to a slow recovery in housing. Rising foreclosures add to the existing supply of houses and depress prices.
In addition, key federal programs such as the purchasing of mortgage-backed securities to keep borrowing costs low and the homebuyer tax credit are set to expire in the next few months.
Homebuilder DR Horton Inc. (NYSE: DHI) and banking giant Wells Fargo & Company (NYSE: WFC) are two companies that will benefit from a sustained recovery in housing.
