Elect Barack Obama
Impeach Bush & Cheney!
"Google" your Voter Registration
Register to Vote
Vote Early-Absentee-Nov4
Visit the Democratic Party
New Home Sales Surge Likely Result of Price Plunge
Be prepared when the wingnut pundits tout today’s surge in new home sales as evidence for Bush’s economy. To keep you armed, here is the dirty underbelly that the administration rather you not know. It goes something like this…
Today, US Stocks, yields, and the Dollar all rallied on news that the U.S. new home sales were up big (+16.2%) “hinting at unexpectedly robust activity in the housing market” according to Reuters news service.
The data was touted on CNBC, Reuters, and Bloomberg, among others, as further evidence of both a firm U.S. economy and of a bottomed out U.S. Housing market. The bond market confirmed that view by selling U.S. bonds. That raises yields and implies that traders believe the data will encourage Federal Reserve members to forego contemplation of any near-term rate cuts.
What was less advertised was the RECORD drop in housing prices. In April, the median sales price of a new home fell $28,500 to $229,100 from $257,000 in March, down 11%.
No wonder new home sales were up – there’s a fire sale going on. Again, according to Reuters, “[the record price drop] showed home builders taking extraordinary steps to move houses”.
This rise in new home sales is akin to the misleading increases in U.S. auto sales that occur when carmakers are layering incentive upon incentive (Such as cash back and zero percent financing) in order to offload inventory.
Note that homes account for 44% of all wealth in America.(compared to 17% in retirement and 6% in sstocks, bonds, etc.] that would mean an overall loss of American wealth of (11% x 44% = 4.8%) IF that level of price drop rears it's ugly head in the upcoming 'existing home sales' data. Either way, that's quite a tumble for a single month.
Tomorrow, we’ll be presented with ‘Existing Home Sales’ – a number with far more influence on the nation’s overall housing market since there are many more existing homes (i.e. they have had a previous owner) on the market than there are New Home Sales (i.e. homes that have had no previous owner).
Stay tuned.
- Tom Ball's blog
- Login or register to post comments
Printer-friendly version- Send to friend
Join us & contribute
Proud members of the Democratic Party
Copyright 2006 Democrats.com. All rights reserved. Privacy Policy
They are upbeat about the real estate market but I'm not
There has been a record number of foreclosures and bankruptcies in the nation. Since last summer I've been keeping track, for my own knowledge since we can't trust the news, about what is going on in the real estate area. The website www.realtytrac.com is a good site to see how many loans are going down hill. I've been keeping trac of California and its not a pretty picture. Los Angeles county has doubled the amount of mortgages in trouble since a year ago. San Diego has also. Lately 1,000 more was added to the number just in one week for L.A. I don't see any of this going away soon. I've been keeping track of several counties in California for a year and the numbers aren't going down yet.
I have noticed condos get bought that are located next to the coast but more problems pop up to replace the ones that were bought. Of course it hasn't been a secret if one watches the stock market that mortgage loan companies (over 60 of them) are in trouble one way or another.
One of the new home builders has decided they aren't going to forecast their earnings for the rest of the year because they are in trouble.
So I am surprised to hear the exuberance today about new home sales! What does this mean for the economy in reality? Have a look at that website and look at the interactive map. It will show tons of icons representing homes in trouble.
House Sales
The GOP would like to say that the housing market is booming, but it has been widely reported differently. I am continued to be amazed that they continue to lie about an issue that is front page news. But the American People are fools. I do not include this site and the people here who are informed, I am talking about the general public who will believe whatever those fools tell them. They are too lazy to read or listen to news.
Real estate sales are down, period. Bush and his economy. I am so sick of this man I could scream.
WASHINGTON(AP) Sales of existing homes fell more than expected in April while prices slid for a record ninth consecutive month, indicating further troubles ahead for the housing market.
The National Association of Realtors reported Friday that sales of existing homes dropped by 2.6 percent last month to a seasonally adjusted annual rate of 5.99 million units, the slowest sales pace in nearly four years.
The median price of a home fell to $220,900, an 0.8 percent decline from the median price a year ago. The median is the point where half the homes sold for more and half for less.
The slide in existing home sales came after a report Thursday that showed a big 16.2 percent surge in sales of new homes in April that occurred as the median price of a new home fell by a record 11.1 percent from the previous month.
Analysts said the disparity in sales of new and existing homes for April reflected in part the decision by builders to aggressively cut prices to unload inventory while homeowners are still reluctant to lower their asking prices.
"It is only a matter of time before homeowners realize that the dream is over and that price cuts are now necessary to sell their homes," said Peter Schiff, president of Euro Pacific Capital, a Darien, Conn., investment firm.
The supply of existing homes for sale shot up to a record total of 4.2 million in April, an increase of 394,000 from the March supply. Analysts predicted that this big inventory surge would act to further depress prices.
"We're swimming in supply," said Mike Larson, a real estate analyst with Weiss Research, who cited a number of factors for the unsold homes.
"We're swimming in supply," said Mike Larson, a real estate analyst with Weiss Research, who cited a number of factors for the unsold homes.
"It is only a matter of time
"It is only a matter of time before homeowners realize that the dream is over and that price cuts are now necessary to sell their homes," said Peter Schiff, president of Euro Pacific Capital, a Darien, Conn., investment firm
It's not homeowners that are selling. It's the companies and banks and tax offices holding the mortgages and liens that are trying to sell. So... the rosy picture painted by the neocons is just that; a picture, not the reality.