Fear Sweeps Through Housing Sectors
Fannie Mae (FNM) finished the day down 4.3% and was down over 5% intraday. GM continued its fall, down another 2%. The home builder sector was hit as well with Toll Brothers leading the retreat off 4.5% and Countrywide Financial dropped 3% in the last two sessions.
Keep in mind that Fannie is largely held by institutions. And despite being down over 20% since the beginning of the year, FNM volume today was 3 times the average. Fear is sweeping through the credit markets when institutions sell into such a fall.
Time will tell if this is the beginning of the end of the housing bubble, but it very well could be. If so, it is following a path I have expected; a cascading collapse through finance stocks, home builders and finally down to the retail level.
Regardless of where we are in the cycle, billions of dollars evaporated from mortgage lenders and home builders in the last two days. And if the financial media continue to whistle past the graveyard, rest assured The Housing Bubble will keep you up to date.