In typical "bad news is good news" fashion, Bloomberg news was rejoicing at the increase in new home sales [MOM anyway] in July:
Aug. 26 (Bloomberg) — Purchases of new homes in the U.S. jumped more than forecast and demand for long-lasting goods such as autos and computers climbed, reinforcing signs the economy is rebounding from the worst recession since the 1930s.
Home sales increased 9.6 percent in July, the most in four years, to a 433,000 annual pace, figures from the Commerce Department showed today in Washington. Another report from the department indicated bookings for durable goods climbed 4.9 percent, also exceeding forecasts and the most since July 2007.
As usual however, the margin of error on the report is so high it’s hard to put much trust in it. Here’s what the Commerce Department said:
Sales of new one-family houses in July 2009 were at a seasonally adjusted annual rate of 433,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.6 percent (±13.4%)* above the revised June rate of 395,000, but is 13.4 percent (±12.9%) below the July 2008 estimate of 500,000.
The median sales price of new houses sold in July 2009 was $210,100; the average sales price was $269,200. The
seasonally adjusted estimate of new houses for sale at the end of July was 271,000. This represents a supply of 7.5
months at the current sales rate.
Bloomberg was also rejoicing over the inventory reduction:
Builders had 271,000 houses on the market last month, down 35 percent from July 2008 and the fewest since March 1993. It would take 7.5 months to sell all homes at the current sales pace, the shortest time since April 2007.
Home sales are responding to policy efforts such as an $8,000 tax credit for first-time buyers, the Fed keeping its benchmark interest rate near zero and central bank purchases of mortgage-backed securities to free up funding for housing.
Selling new homes is not good news for the market- but bulldozing them might be. While existing home inventory is officially 10.6% lower than last year, the shadow inventory of bank-owned properties that are not listed and wanna be sellers is suspected to be enormous. We need more homes being added to the inventory like we need to add another trillion or so to the national debt.
This is unlikely to represent a "bottom" for new home sales or some kind of "rebound". The market will remain in the dumps until the current inventory has been absorbed and supply and demand are back in balance. That point is years away.
“Home sales are responding to policy efforts such as an $8,000 tax credit for first-time buyers, the Fed keeping its benchmark interest rate near zero and central bank purchases of mortgage-backed securities to free up funding for housing.”
and i suppose these three factors can last forever? LOL!!!
“The number of U.S. households on the verge of losing their homes soared by nearly 15 percent in the first half of the year as more people lost their jobs and were unable to pay their monthly mortgage bills.” The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released by foreclosure listing service RealtyTrac. On a state-by-state basis, Nevada had the nation’s highest foreclosure rate in the first half of the year, with more than 6 percent of all households receiving a filing. Arizona was No. 2, followed by Florida, California and Utah. Rounding out the top 10 were Georgia, Michigan, Illinois, Idaho and Colorado.
Read More: http://www.housingnewslive.com/articles/housing-bottom.php
I’m surprised the graph dropped as far as it did before taking an uptick. In theory, and the way things are going in this country it should bounce around the 20k mark for a while. Builders shed quite a few jobs I reckon though, they are starting to get into building greener homes, gotta come up with a new selling point you know.
Shadow is HUGE HUGE HUGE. MANY reports in California of homes on which nothing has been paid for up to a year, still no foreclosure. And these are NOT homes which could not be sold if foreclosed on.
What’s going on is quite simply that the Federal Government doesn’t want banks recognizing losses on foreclosed homes.
jryskmpr – I agree wholeheartedly. There are a couple examples I am personally aware of in CA in which this is the case.
It’s nice to see sales up for once. We have been seeing good numbers here in Scottsdale, Arizona and the surrounding areas. Inventory has been dimishing due to investor spectulation and first time home buyer’s taking advantage of the $8,000 tax credit. For properties price well and listed under $350K, we are seeing multiple offers and in many cases, the offers are over and above list price. Let’s hope sales continue in this positive direction.
Josh Hintzen