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US Oct new home sales slip, but prices rise
November 29, 2006 (Reuters)
Sales of new U.S. homes dipped in October and inventories rose, but builders boosted prices by over $30,000 per unit after a sharp decline in home prices a month earlier, a government report showed Wednesday.
New single-family home sales declined 3.2 percent in October to an annualized rate of 1.004 million units from a downwardly revised rate of 1.037 million in September, the Commerce Department said. Analysts polled by Reuters were expecting October sales to ease to a 1.044 million rate from a rate of 1.075 million in September.
October sales were down 25.4 percent compared to a year ago.
AntiSpin: We started the week by predicting that this week's existing home sales were likely to show declines from the same period last year but that new home sales were going to be significantly down over the same period last year. The new home sales data were generally reported today as by Reuters above: an aggregate 3.2 percent decline. In an of itself this is alarming. Since housing markets are regional and prices are strongly correlated to employment, housing is usually booming somewhere while busting or staying flat elsewhere, and so in aggregate nationally is always up at least marginally in any period, even during serious recessions such as in the early 1980s. This is the first time that home prices have declined nationally since The Great Depression, but it's reported as no big deal. Pull back the covers a bit and an even more alarming picture emerges.
Here's the report from Denver, one of the "can't lose" real estate markets from the housing go-go days that ended in June 2005 (hit the "stop" button on your browser to keep AO from taking you to another page).
Never mind this "worst is over" nonsense. Your clothes will go out of style several times before this housing bubble decline ends. One and a half years into it, we are on track for our 10 to 15 year correction. The most troubling part is the observation from then that "in past boom-bust cycles, the bust rate of decline has been significantly more rapid than the boom rate of growth." This appears to be coming true for this cycle but in unexpected ways. As the Denver Post story points out, it is very unusual to see a housing market decline this quickly while unemployment and interest rates are falling. It is just as unusual to see foreclosures rising at this rate so early in the cycle; foreclosures normally peak several years into a housing bust recovery.
We charted lots of new territory on the way up. No doubt we will chart a lot more on the way down.
November 29, 2006 (Reuters)
Sales of new U.S. homes dipped in October and inventories rose, but builders boosted prices by over $30,000 per unit after a sharp decline in home prices a month earlier, a government report showed Wednesday.
New single-family home sales declined 3.2 percent in October to an annualized rate of 1.004 million units from a downwardly revised rate of 1.037 million in September, the Commerce Department said. Analysts polled by Reuters were expecting October sales to ease to a 1.044 million rate from a rate of 1.075 million in September.
October sales were down 25.4 percent compared to a year ago.
AntiSpin: We started the week by predicting that this week's existing home sales were likely to show declines from the same period last year but that new home sales were going to be significantly down over the same period last year. The new home sales data were generally reported today as by Reuters above: an aggregate 3.2 percent decline. In an of itself this is alarming. Since housing markets are regional and prices are strongly correlated to employment, housing is usually booming somewhere while busting or staying flat elsewhere, and so in aggregate nationally is always up at least marginally in any period, even during serious recessions such as in the early 1980s. This is the first time that home prices have declined nationally since The Great Depression, but it's reported as no big deal. Pull back the covers a bit and an even more alarming picture emerges.
Here's the report from Denver, one of the "can't lose" real estate markets from the housing go-go days that ended in June 2005 (hit the "stop" button on your browser to keep AO from taking you to another page).
Metro home sales plunge
November 28, 2006 (Denver Post)
The decline, the second largest recorded in the index's 10-year history, is especially worrisome because interest rates moved lower during the third quarter, which is normally a period where home values rise.
"The resale market is facing significant downward pressure on prices," the Genesis report said.
New-home sales in metro Denver are down nearly 20 percent through the first nine months of the year, a new report says.
Foreclosures are a key source of that pressure. The seven- county metro area recorded 14,164 foreclosures in the first three quarters of the year, up 34.2 percent from the same period a year ago.
November 28, 2006 (Denver Post)
The decline, the second largest recorded in the index's 10-year history, is especially worrisome because interest rates moved lower during the third quarter, which is normally a period where home values rise.
"The resale market is facing significant downward pressure on prices," the Genesis report said.
New-home sales in metro Denver are down nearly 20 percent through the first nine months of the year, a new report says.
Foreclosures are a key source of that pressure. The seven- county metro area recorded 14,164 foreclosures in the first three quarters of the year, up 34.2 percent from the same period a year ago.
Another worrisome anomaly: The weakness in the housing market comes despite the addition of an estimated 27,000 net new jobs in the metro area this year. Home-price declines and rising foreclosures are typically linked to job losses.
Nationally, the median price of an existing home declined 3.5 percent in October compared with the same month a year ago, even as the number of homes sold rose 0.5 percent, according to a report Tuesday from the National Association of Realtors.
The price decline was the largest measured since record keeping began in 1968, and it was the first time median prices have declined for three months in a row.
The key phrase here is: anomaly. As our resident real estate expert Sean O'Toole pointed out back in early September: Nationally, the median price of an existing home declined 3.5 percent in October compared with the same month a year ago, even as the number of homes sold rose 0.5 percent, according to a report Tuesday from the National Association of Realtors.
The price decline was the largest measured since record keeping began in 1968, and it was the first time median prices have declined for three months in a row.
Yesterday, in one central valley county of California, $1.2M in 1st mortgages were sold back to the bank, and $200k in 2nd mortgages were completely wiped out. That is a typical day lately.
The most amazing part is that despite the staggering losses involved, and the downstream implications there is NO ONE accurately and timely tracking these losses. The fact that there was a foreclosure, and that the property went back to the bank will show up in time, but the junior lien losses are completely untracked until some far away day when the lender is finally required to report them.
This issue, together with things like the neg am as earnings that jeffolie mentioned, will be blamed in hindsight for no one having saw what was coming. The real problem is the lack of desire to even look.
Back in January 2005 we warned: "Housing bubbles don't collapse suddenly. They go through a long series of self-reinforcing deflationary stages that typically last five to seven years." The most amazing part is that despite the staggering losses involved, and the downstream implications there is NO ONE accurately and timely tracking these losses. The fact that there was a foreclosure, and that the property went back to the bank will show up in time, but the junior lien losses are completely untracked until some far away day when the lender is finally required to report them.
This issue, together with things like the neg am as earnings that jeffolie mentioned, will be blamed in hindsight for no one having saw what was coming. The real problem is the lack of desire to even look.
Never mind this "worst is over" nonsense. Your clothes will go out of style several times before this housing bubble decline ends. One and a half years into it, we are on track for our 10 to 15 year correction. The most troubling part is the observation from then that "in past boom-bust cycles, the bust rate of decline has been significantly more rapid than the boom rate of growth." This appears to be coming true for this cycle but in unexpected ways. As the Denver Post story points out, it is very unusual to see a housing market decline this quickly while unemployment and interest rates are falling. It is just as unusual to see foreclosures rising at this rate so early in the cycle; foreclosures normally peak several years into a housing bust recovery.
We charted lots of new territory on the way up. No doubt we will chart a lot more on the way down.
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