"We expect the first of May housing data out this week to show a significant decline from April, given that May is the first month after the second round of housing stimulus expired," wrote James Moore, economist at Morgan Joseph. "Consumers who were willing, and had the means, to take advantage of the housing stimulus, were pulled forward in terms of the timing for their housing purchases, which may well pressure housing activity throughout the rest of this year."
Homebuilder stocks were among the best performers today ahead of the release of the National Association of Homebuilders Index tomorrow and May housing starts on Wednesday. The SPDR S&P Homebuilder ETF (XHB) is still up 8 percent this year, even as the S&P 500 has given up its 2010 gain.
A graphic of the Mortgage Bankers Association Purchase Index, which includes all mortgage applications for single-family homes and comes out Wednesday, has been a leading indicator of the housing stocks and market, according to John Roque of WJB Capital Group. "With the index having already broken down, we figure weakness in the S&P Homebuilders’ index should follow," wrote Roque, in a note to clients today.
You know things are looking bleak when a report that is upgrading a stock today is titled: "Terrible Housing Market Environment with No Known Positive Near-Term Catalysts. Upgrade to Buy."
That’s from Citigroup analyst Josh Levin on Pulte Homes (PHM), who goes on to explain, “Although we are unable to identify any positive catalyst for either Pulte or the industry over the next few months, at its current valuation, we view Pulte as a cheap call option.”
Pulte shares are barely up on the session.
John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.