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Investing Specialists

The Housing Market Picks Up Steam

The trickle of good housing news has turned into a flood.

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This week the market continued to fixate on the European situation. News on the structure of support loans for Spanish banks (a concrete action) and promises of greater fiscal integration (still just a hope) set the market on fire Friday. Investors had previously braced themselves for a no-news, divisive European meeting, so the modestly good news came as shock. This is still not the final fix, and Europe will continue to struggle over the next several years under austerity programs, diminished growth prospects, and waning confidence. An earnings warning from  Ford (F) was a reminder that things outside of the U.S. are still slowing. Next week could bring a more sober analysis of the facts.

While the market continued to focus on Europe, the U.S. continued to turn in improved news on the housing front. The majority of this report discusses how the trickle of good housing news has turned into a flood. For those worried about a deteriorating U.S. economy, it seems odd that the most economically dependent part of the economy is showing the most strength.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.