Today the market sold off because of fears that a hot New Home Sales report will delay the Fed from cutting rates. I do not believe that will be the case. Indeed, as a result of the widening trade balance, the next GDP report will likely show that US economic growth has slowed to under 1%. Today's housing report is loaded with volatile data, and will likely be forgotten quickly.
New home sales did, indeed, shoot higher in April on the back of mild weather and price cuts. The two charts at the right, however, show that Housing is still in a free fall.
The National Association of Home Builders now claims that Housing is bottoming, but, hey, I thought they said that 5 months ago. The top chart, New Home Sales, shows the uptick has done little to change the trend of housing, and the lower chart, Median New Home Prices, is anything but positive for housing. 
The lower chart shows that home prices in the month of April fell sharply (-11% year over year.) An 11% drop in prices on the average house is over $30,000. That is not good news for consumers. Neither is the fact that it puts lots of mortgage balances underwater relative to their underlying home prices, which will keep pressure on the mortgage banks.
The only good news I see in the report is that a capitulation stage is probably beginning in housing where speculators and builders with unsold inventories are beginning to cut bait. That makes for a kind of coincident beginning of the end and beginning of the beginning. But it is months off before we will see any true year over year growth in housing.
That means this report will be forgotten quickly as further economic reports are released showing very slow growth.
I am convinced that the headlines in the coming weeks will have more worries about slow growth than strong growth and that will be good news for stocks in the consumer staples, health-care, finance, and selected global industrials.
