The Chart That Housing Bulls Don't Want You To See

"It is hard to square the economic circle of homebuilder/REIT-related equities falling (given concerns about the higher-rate environment) with a broad equity market rally as much predicated on the re-blowing of a real-estate bubble as any other real fundamental basis. The conundrum is perhaps even greater when we note that in spite of an unprecedented surge in mortgage rates, pending home sales surged in the most recent data. However, as the following chart makes all too clear, home sales lag mortgage rates with a very high level of correlation and it appears, we suspect, that this most recent surge in home sales (extrapolated by those of that bias to mean that the housing recovery is sustainable even with higher rates already crushing affordability) is merely a pulling forward of activity and will lead to a significant softening in coming months (especially relative to expectations) should the taper-tantrum in bonds remain.







Charts: Bloomberg"

at http://www.zerohedge.com/news/2013-07-06/chart-housing-bulls-dont-want-you-see