New York, August 23-- If there were any doubts that we're still living in the era of the stay-at-home economy, the rows of empty seats at the Athens Olympics should help erase them.
The stock market, too, has been a less-than-hot ticket over the summer months, as equities have retreated on concerns over anemic job creation and signs of slowing technology spending.
But the urge to sit at home and watch the Olympics on television points up one sure thing in an economy that's riddled with question marks: The nesting trend is alive and well.
Housing has been one of the few bright spots in Wall Street's long, bleak summer. Despite concerns that a new era of higher interest rates would burst the housing bubble after three years of sharp gains, the sector remains strong. And most analysts expect it to remain so in the second half of this year.
"Reports of the death of housing have been greatly exaggerated," said Rick Meckler, president of LibertyView Capital Management.
Housing has not only held up, demand appears to have gained momentum recently. Fannie Mae, the leading home finance company, on Wednesday raised its forecast slightly over July. It now sees new home starts up 7.7 percent over last year's record pace and a 4.8 percent increase for existing home sales.
"As people start getting new jobs they are feeling better about their future and spending on housing," said James Glassman, senior economist at J.P. Morgan Chase. The housing sector hasn't gotten hurt that much by the higher rates because the economy is doing better, he said.
Some of the money flowing into mortgages will help stocks. To start with, housing is a critical prop for the economy, spurring demand for raw materials, and a wide range of appliances, housing products and services.
Homebuilder stocks have been in a strong recovery this month while most stocks have headed lower. The Dow Jones U.S. home builders index climbed 12.5 percent from its lowest level last month while the Standard & Poor's 500 fell 5 percent from its July peak and Nasdaq decline more than 10 percent.
Retailers with products aimed at home owners have been strong this month. Home Depot has been one of the market's best performers this month, climbing 12.5 percent, while arch-rival Lowe's also scored a double-digit gain.
The housing sector's resilience is also seen in the Dow Jones U.S. financial index, made up of companies that benefit strongly from home finance, which is up 5 percent in August.
The housing-related stocks have been helped by the view that the economy is not growing fast enough to push interest rates and inflation sharply higher, as some had feared earlier this year. The Federal Reserve has hiked interest rates twice this year, trying to keep inflation in check.
"The Fed doesn't have a lot more work to do," Glassman said. "It was a different scenario when the Fed started tightening (in late June.) Then we thought the economy was shifting into overdrive. But now it's unfolding differently. It looks like they can push rates back up more slowly."
Glassman figures that the slowing pace of rate rises "ought to benefit stocks in general, but so far it hasn't." Only the most interest rate sensitive stocks have rebounded.
Investors remain troubled by the rise in oil -- now near $50 a barrel -- and continuing violence in Iraq, analysts said. Fear of terror attacks also remains a critical concern for investors. The National Association for Business Economics in a survey this week listed that fear as the biggest threat to the economy.
Real estate has been the "comfort food" of investors in recent years. "Investors coming out of the debacle of the bubble have taken a lot of comfort in housing, an investment that they can count on -- and not much has happened to shake them of that view," Meckler said.
