Housing Doom Housing Bubble Blog

The National Association of Realtors released their numbers for February Existing Home Sales yesterday, but any correlation between the NAR’s analysis and the data is purely coincidental.  According to Lawrence Yun, chief economist of the NAR:

WASHINGTON, March 24, 2008 - Sales of existing homes increased in February and remain within a fairly stable range, according to the National Association of Realtors®. 

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007.  The sales pace has been in a fairly narrow range since last September.

Let’s just take a look at a couple of graphs to put his comments in perspective.  Here’s what the monthly sales graph has looked like since January 2001:

The increase from January obviously could be explained by normal month-to-month variability- there is insufficient evidence to declare February’s sales numbers an improvement, especially in light of the year-over-year change:

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The headline this morning from Yahoo Finance:  [Thanks L!]

New Home Construction Up Last Month

I’ve got to admit, I read that and thought "What in the world are they thinking?"  Then I read the Census report.  I still wonder why builders maintain the level of production they do, but this report at least, shows that they continue to slow:

WASHINGTON (AP) — Construction of new homes and apartments rebounded in October by the largest amount in eight months but the unexpected increase was not viewed as a signal of a housing turnaround.

The Commerce Department reported Tuesday that housing construction rose by 3 percent in October, the first increase after three months of declines and the biggest advance since a 6 percent rise last February.

However, all of the strength came in the volatile apartment sector, which jumped by 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.

Here’s the official wording from the Census Bureau:

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,229,000. This is 3.0 percent (±10.6%)* above the revised September estimate of 1,193,000, but is 16.4 percent (±8.0%) below the revised October 2006 rate of 1,470,000.

Single-family housing starts in October were at a rate of 884,000; this is 7.3 percent (±10.1%)* below the September figure of 954,000. The October rate for units in buildings with five units or more was 312,000.

So the rise was in the more volatile month-to-month, and within the margin of error.  Year over year we are obviously looking at a decline, particularly for single family homes.

[Graph from U.S. Census Bureau- sorry about the resolution, but I start getting complaints from readers when images are over 600 pixels.]

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According to the Tucson Association of Realtors, the median home price in October was $210,000.  This was down 1% year-over-year, and down 8.3% off of the record price of $229,000 set in June 2007.  While prices have been up and down in recent months, prices are back to levels first reached in the spring of 2005:

According to Judy Lowe, President of the Tucson Association of Realtors:

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The NAR released it’s Pending Home Sales Report today at 10:00 am Eastern Time.  I however, started working on it at 7:00 EST with the working title of Pending Home Sales Hit All Time Low, and as you can see, I didn’t have to change the title.  According to Marketwatch this morning:

The pending home sales index fell 6.5% in August after dropping a revised 10.7% in July, the National Association of Realtors reported Tuesday. The index is at its lowest level since its inception in 2001.

Pending home sales are down 21.5% compared with a year ago and is down 22% compared with six months ago.

The few economists who forecast the index were looking for a drop of about 2.1% in August.

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Foreign central banks were net buyers of US obligations in the week ending September 26. A modest selloff of treasuries (following on last week’s huge purchasing) was more than offset by a continuing fairly healthy buy of agencies.

Once again thanks go to Twist for the updated chart and graph.

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Housing Doom no longer feels so alone following trends in foreign central banks’ net buys of US obligations. Early Thursday, Ambrose Evans-Pritchard of the Telegraph posted a story [1] speculating that the recent strong selling of US treasuries suggested a quiet dumping by the Chinese.

It’s especially good to have company this week, when both short and long term trends got knocked into a cocked hat. Foreign central banks, in a complete 180 degree turn from the previous week, bought a fair number of treasuries but sold even more agencies.[34] The agencies selloff was by far the biggest negative result we’ve observed since we picked up the series in early May. The pattern and change are a bit like the week that ended August 1st, but the difference between treasuries and agencies is much bigger.

Once again, thanks go to twist for the updated chart and graph.

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Q: What do you get when you cross a tiger with a parrot?
A: I don’t know, but when it talks, you better listen.

Since mid May, Doom has been following the Thursday Reuters reports on net buys by foreign central banks of US debt obligations, treasuries and agency debt. Last week [28] the agencies performance beat the treasuries by over $21 billion. It’s certainly a strong signal, but does it actually mean anything?  [update: Twist did her chart magic overnight and I’m now adding her graphical contribution — Thanks!]

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AEI’s March 28, 2007 Subprime Seminar - XII

Doom is very proud to present our completed unofficial transcript of AEI’s March 28th seminar on the Subprime Mortgage Crisis.[1] This conference was considered sufficiently important that a follow-up session [2] has been scheduled for October. As well, about three weeks ago the AEI finally posted their own official edited transcript of the first 80 minutes — omitting the Q&A session. We believe our effort is a valuable supplement to theirs.

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Once more, the Las Vegas single family market has managed to underperform my expectations.  June is typically the month with the greatest sales activity in Las Vegas, but not this June.  1,476 homes sold in June- down 41% year-over-year and down 6% month-over-month.  [Data from GLVAR]

The typical seasonal bump has not occurred this year.  In the four months from February to June, the rise is usually significant, but not this year: [Edit note:  2007 is red for emphasis, number is not negative.]
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Last week for Op-Ed Friday, I posted a graph of the NAR’s predictions for home price appreciation through the second quarter of 2008.  The graph looked like this:

This week however, the NAR came out with a different set of predictions, and the graph looks like this: [I can’t find the data for last weeks chart on the website now- the chart with the new data replaced the old one.]
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