The 'Bear' Has Its Claws In The Housing Stocks

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Other data released this week suggests that the foundation of the housing market is starting to seriously deteriorate. On Wednesday, the Mortgage Bankers Association weekly mortgage applications index registered yet another big decline, and has declined 12 of the past 14 weeks. The mortgage purchase applications index - the critical datapoint in assessing the strength of actual home sales -- dropped 5%. Keep in mind that August is historically the second or third strongest month seasonally for home sales

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Another fundamentally bearish data report that was released this week was this foreclosure report from RealtyTrac. This report showed that foreclosure filings -- default notices, auctions and bank repossessions -- increased 2% in July, fueled by a 6% jump in foreclosure starts.

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Finally, the big mortgage banks are starting to announce widespread layoffs in their mortgage finance units.