Peter Mocici: Markets Misinterpret Recent Data

The National Association of Realtors plans to report April existing-home sales on Thursday, and economists predict that sales came in at a 5.2 million annual clip, up modestly from the 5.1 million rate in March but down significantly from last April's 5.8 million pace.

If April sales come in lower than economists expect, stock and bond investors will interpret them as bad news. Along with declining housing starts, slow traffic at new-home showrooms and flat industrial production data for April, disappointing existing-home sales would be interpreted as evidence that the already weak economic recovery is losing steam.

My view is that both equity and bond traders are misreading housing and industrial production data.

The U.S. housing market was already holding back the recovery. There's nothing new in these data indicating a much larger drag for the second quarter. The economy need not be led out of recession by new-home construction, and for seven quarters, the economy has expanded without a housing construction recovery.

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