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New Home Sales Plunge By Record 33%, Market Plunges To Welcome Double Dip
New home join the existing home sales double dip brigade, and plunge by an unprecedented 32.7%, nearly double the expected -18.7, compared to a previous reading of 14.7%. The government succeeded in making a mockery of this data series with all its ridiculous stimuli, and now we are officially in a housing double dip absent another massive stimulus bill. The median sales price of new houses sold in May 2010 was $200,900, lowest since December 2003, and a 9.6% drop YoY. Full report here.
Oh, and stocks plunge on the news now that there is no doubt which way the Head And Shoulders-shaped recovery is headed. The only reason the market is not down 10% at this point is because the Fed will imminently announce negative interest rates, as it continues to exhume the grave of JM Keynes.
Here is what the official entrance into a double dip looks like:
Even Goldman can't spin this abysmal result:
BOTTOM LINE: Home sales fall sharply in May to a new, all-time low following expiration of tax credit deadline. Prior figures revised down significantly. Report underscores challenges to builders posed by large overhang of unoccupied existing homes.
US-MAP:
New home sales -6 (2, -3).KEY NUMBERS:
New home sales -32.7% in May (mom, -18.3% yoy) vs. GS -25%, median forecast -18.7%.
MAIN POINTS:
1. Sales of new homes plummeted in May to a new all-time low of 300,000 (annual rate) following the April 30 deadline for contracts to be signed to qualify for the homebuyer tax credit. The report also featured large downward revisions to sales rates for April (446,000 vs. 504,000 previously) and March (389,000 vs. 439,000) that raise questions about the power of this stimulus, which was extended from a November 30 deadline (for completed sales) to April 30 (for signed contracts) and June 30 (for completed sales).
2. In all likelihood, sales will rise a bit in coming months, as the 300,000 figure reflects some acceleration of sales into previous months to get the tax credit. That said, the persistence of sales at such low levels (and the magnitude of the revisions) underscores the challenges facing homebuilders, whose projects must compete with a large overhang of unoccupied existing homes.
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Which is why only Wall Street and the government do not care about U-6. Just pretend they do not exist and they do not exist I suppose.
There is no spoon. There is no U-6.
delete
How many of those suckered into paying $50K more for a house than they needed to in order to get a free $8K, are going to stop paying shortly.
Unlike cash-4-clunkers, where old cars were destroyed, the houses are still around.
If you're going to bribe people to buy stuff, it helps to destroy excess inventory.
Cut the BS..WF Leaders???? last time I checked, they only serve their own agenda do get relected on the short term...and the sheeple be dammed!!!
agreed, every dollar of subsidy of housing via low interest rates, subsidized mortgage rates, tax credit, mortg interest write-off, just increases the price of houses, so just that much more principal to pay off debt, just that much more to default on.
Truth is people will spend 30 to 50 percent on of income for housing, with some adjustments when things are cheaper or more expensive (live with mom, smaller sf condo rather than house etc)..and the four things that make up housing costs are interest on mortgage, price of house, property tax, and any govt subsidy...assuming maintenance follows inflation pretty well..its the other four that just simply shift amongst themselves
Don't worry, Bob Toll sold at $60.
Market isn't down triple digits because of Fed announcement. They'll through an "extended period" language in there and some talk about Europe worries easing and the potential for an end of day rally gathers momentum.
BTW: Clearly there will be yet another housing credit coming down the line or something even sillier to try to prop up the dead patient.
Weekend at B[arry's].
http://thelasthonestman.files.wordpress.com/2009/12/weekend-at-bernies1.jpg
Oh no, no no no...IT IS "Weekend at BERNIE's"
And between you and me, I have my next avatar planned according to if the HFI passes next tuesday or not. If it doesn't, I will be Bernie. If it does, well I'm not telling.
http://staatpreussen.com/html/Ben-Shalom_Bernanke.jpg
Heh heh. He looks like a socialist University of Chicago professor.
The author of The Gulag Archipelago would have liked to give a personal tour of the concentration camps in Mother Russia. "This iz vut happens ven you apply teeree to real life!"
http://av.r.ftdata.co.uk/files/2010/06/New-home-sales-versus-existing-ho...
"They" are hoping benny's got something up his sleeve... With the rosey picture he and Tiiimmaaay are painting, it would look very weird if they pushed for another stimulus though. Ron Paul would jump up on a tank and roll towards the white house if that happened - rightly so.
Coming Canadian Attractions.
Toronto home sales down 20% Listings of residential real estate for sale up 21%.Greater Toronto Realtors reported 4,139 sales through the Multiple Listing Service® (MLS®) during the first two weeks of June 2010. This represented a 20 per cent decrease compared to the 5,185 sales recorded during the same period in 2009. New listings increased by 21 per cent annually to 7,985.
“The pace of existing home sales in the GTA has slowed to more normal levels following a record-setting start to 2010,” said Toronto Real Estate Board President Tom Lebour.
“Due to higher mortgage carrying costs, sales in the second half of 2010 will not be as high as what was experienced during the last six months of 2009.”
The average price for June mid-month transactions was $437,039 – up seven per cent compared to the average of $407,716 recorded during the first 14 days of June 2009. “The seller’s market conditions experienced during the first few months of the year have given way to more balanced conditions. Home buyers are experiencing more choice,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “With more choice in the market place, price growth is starting to slow.”
Source: Toronto Real Estate Board
No one is immune a lot are ignorant of the fact though.
Aus and Canada have gotten a bounce from spike in commodity prices...won't last, they wil be somewhat like us in a bit...different, but bubbles will burst...just a question of rate of slope down and how far
If the current low of 300,000 (annual) equals the lowest since they started keeping records in 1963 then it would mean that it is truly the lowest by a large margin when looked at as a percentage of population.
There is something seriously wrong with even these poor numbers... because there isn't any construction. What new sales?
I'm in construction and can assure some houses are being built...even if economy is declining, some houses needed, say like in mineral rich states that are growing (OK, ND etc) and regional shifts. Even as Detroit depopulates, former depopulation zones like rural ND are growing gain. Construction sucks, but there are places where market justifies new housing.
Also, developers can now buy land with roads and utilities at nearly same, lowering price of raw land from banks selling older bankrupt developers projects, and building houses at least 25 percent cheaper than a few years ago...so in markets where house prices are giving mortgages lower than rent, you can build new houses and make money in some cases...but as prices go down and inventory goes back up...this will end.
What they should really track is net housing, new housing minus houses being demolished in rust belt, central valley Cali etc...
Same comment as yesterday...expiring incentives cause abnormal spikes and drops due to demand being pulled forward. The important data points in housing will come over the next few months.
Tyler (or anybody with publishing rights), please post a chart of Total Vehicle sales as an example.
I'm not saying we'll see a slow and steady increase in housing going forward, I'm just saying those are the important data points to watch, not the month immediately following the expiration of the incentive.
Like this?
**sniggers**
...Maybe a better one (highlighting the original assertion that expiring incentives cause abnormal spikes and drops due to demand being pulled forward).
I never said we returned to the normal run rate. I merely said the incentive causes spikes and drops. If you look at 2009, you can actually see this (unlike your first chart which cut the time period short...very funny by the way). And if you shorten up your chart so you can see more detail in 2009 and 2010, you'll see a slow and steady rise after the spike and drop.
If you want a the actual data (vs. per capita), try SAARTOTL on your Bloomberg. If you don't have a terminal, I'm sure you can get the data from another source.
IMHO, your assertion is sound.
IMHO you're grossly manipulating the data by cutting it off at APRIL 30 2009 (BEFORE cash for clunkers).
I know you get my point, and you can see what the data (unedited) shows, but that doesn't support your view, so you manipulate it for everyone else on this site to see in a fashion that supports you. QUIT BEING A FUCKING PROPAGANDA ARTIST AND SHOW THE FUCKING DATA!!!
I don't have a Bloomberg terminal, nor a website to host my custom image (ZH comments can only include URL references to images). If you google "SAARTOTL" as you suggested, and look under "images", you will notice that's the only image option. I thought it supported your claim, so I linked it.
Similarly, your original request for a graph regarding "Total Vehicle Sales" was a google, and you will notice those two come up on the first-or-second page as the best examples I could find with your point.
I'm not trying to cherry pick. I agree with your point. If you have a URL that better illustrates your argument, post it, and I'll be happy to link it.
My apologies for the misunderstanding. I thought you were using a Bloomberg terminal and selecting the dates. I have a terminal, so I can see the current data through May 2010 (but I don't have the rights to post the chart to ZH). The chart you posted cuts off prior to the cash for clunkers incentive, so it does NOT show the data points supporting my argument...thus I took your comments to be a sarcastic jab.
In the second graph you posted (per capita), you can see the spike/drop (and a little bit of the subsequent climb) following cash for clunkers in 2009. We're seeing the same spike/drop now in housing due to the tax incentive. We just have to wait and see where we go from here.
Again, I apologize for the misunderstanding.
It's all good! ;-) Our mis-communication is entirely understandable.
You write well and make a good point, and I happen to agree (expiring incentives making wild short-term swings). So, your point is important that we can't make too much of the "short-term" sensational number (any given number can be an overly-amplified outlier).
My personal bias is that there is substantial mid- and long-term downward pressure (watch house prices crash when the rates start drifting higher, F&F stop buying mortgages, and/if they are serious about eliminating the mortgage interest deduction!) However, that is a separate point. ;-))
More and more central bankers wake up every night in a cold sweat, screaming because the dream is always the same: Come back from lunch, hoping for a quiet day, and then IT happens: Flash Crash!....What a Feeling!
O O P s
Aspen-area ranch sells for $24.5M 5:19am
ASPEN — Pitkin County's most expensive single-family home sale in nearly a year closed Tuesday when a McLain Flats area estate fetched $24.5 million. S I C K†
s a v e d
ka ching
It's a great property. Buy two, they're small!
I'd love to record some of my conversations and post them here. It would scare the shit out of people.
I'm not sure of legality of that however.
By all means . . . screw the legalities.
We need more scare. bring it on.
Indeed, and remember to don the goalie mask, wielding a machete.
conversations with whom?
'Leaving; on a jet plane
Don't know when I'll be back again'
Time to look around and decide where you want to ride this one out. By Fall your options may become severely limited. Imo
Chile or Ecuador?
Honduras. At least they stick by their Constitution.
Paraguay my friend.
Shares of homebuilders are gaining???
There is no reality.
The "whisper number" was ZERO.
"We gotta buy low right?" Said BS as he took a swig of Malibu rum. "When do I gea da pway in da Workeen Gwoup?" Bawknee was pouting. "I thet dis whowl feeen up!" "Barny, you know you can't. It isn't allowed." "Wewrl, pwease can I hit a buy butteen? Juss oawnce? Pwease?!?!" "Oh ok....Timmy, let Barney have the controller." Geithner handed Bawknee the 8 bit Nintento controller. "TIMMAH!!!!"
I fully expect Ben and Timaaay to roll out a new tool for further easing, and probably today. But their tool box is just about empty now... Trillions thrown at this - like pissing into the wind for all the good it did. Merely bought us a little time and assured the end game will be worse.
DoubleDipDeflationaryDebtDepression, Bitches!
So has anyone really started to now think about bank financials now with housing so freaking bad? We know that the government is letting banks do mark-to-unicorn and that the existing homes on the market contain a lot of forclosures. This could start causing RMBS to implode worse than 2008. That is why banks are still refusing to lend and build more capital cushion.
In a pre-market open interview, and hence pre-housing market report, Meredith Whitney offered her views on CNBS
http://seekingalpha.com/article/211177-meredith-whitney-housing-double-d...
She is great. I just have to wonder how many more "respected" Wall St. people have to say things are fucked before people wake up?
To quote her:
"You look at the non-performing loans on bank balance sheets and they have doubled inside of one year alone."
Well, we are still at 160 oz of gold for the median home of $200,000. So gold is signalling that housing still has long way to fall.
do you have a target for price of median home in gold?
2 to 5 ounces sound reasonable after the FIRE economy collapses?
historic charts show that 100 oz gold is the bottom of the ratio
http://www.sharelynx.com/chartstemp/USHLSPOG.php
scroll down for long term chart
http://whiskeyandgunpowder.com/us-house-prices-in-gold/
my target of 2-5 oz is only supported by stories like the one about a German waiter getting tipped a single gold coin and then using that single coin to buy the hotel where he was working after prices collapsed
More like 10 to 30 ounces. 2 to 5 ounces would be a severe depopulation scenario. Which also looks likely.
Well, here at Starbucks there is the usual big mid-day crowd... A buck and a half, with 50 cent refills, free second-hand newspaper, and all the free internet you can suck down. Breadline, 21C style.
Housing will fall for another good 10 years from the tea leaves I've amassed online. My brother wanted me to buy his mother-in-law's house after they packed her off to a nursing home. I just laughed at him.
Ukraine seems to be calling to me. Women are H-O-T and the guys are too drunk to notice. Besides, they've been in 'Survival Mode' like, forever...
Do all the doomsters actually look at the chart or are they too focused on the image of doom that they see in their mind's eye? It's looks to me like every single time that chart has taken a major dip in the past it bounces right back up again. Oh wait, I know, this time is different, right?
Have you seen the U6 chart lately? Let's tell the welfare addicts and 99-weekers that mortgage rates are historic lows.
"Who are you?!.....Who are you?!.....Who are you?!.....Who are you?!"
The mistake made by many here is that they believe economic data has a direct, immediate effect on stock price movements, when they are actually just a rationalization for them.
I don't believe that anymore, and it's amazing the amount of stress and frustration that went away when I quit looking for a correlation that didn't exit.
BUT - I still claim full rights to spit in disgust or point & laugh at the HUGE DISCREPANCY between the bloodyawful news, and the horrifying impact it has on lives, and the rosy markets. Especially now that I understand who the markets benefit, and to whose cost...!
Nothing wrong with pointing out over and over the disconnect. Helps to chip away at this mass delusion people have, that the DOW numbers will actually do anything good for them.
Jesse Livermore: "The public is so often whipsawed that one marvels at their persistence in not learning their lesson."
I'm still a sucker at times but less so as the truth gets pointed out.
But, if you're in the inflation scenario camp, rising markets only confirm a weakening currency, too.
Quite so.
I'd say that's more an 'And' than a 'But'...
Who cares! The US is moving into the second round!!!!
Looks like Cramer will be ignoring his June '09 housing bottom call.
All the prisoners in CA, FL, and NV got all the tax credits. This goes to show how ignorant our government really really has become.
WASHINGTON (Reuters) - The U.S. first-time homebuyer credit, aimed at boosting demand amid the recession, is still beset by significant scamming, though authorities made some progress rooting out fraud, a federal watchdog said.
The politically popular program gave qualified buyers in 2008 through 2010 a tax credit equal to about 10 percent of the purchase price, generally limited to $8,000. About 1.8 million taxpayers got $12.6 billion in credits through February of this year.
The Treasury Department's inspector general for tax administration, which has issued a series of reports detailing fraud in the program, on Wednesday found that nearly 15,000 people got erroneous credits totaling about $26.7 million, including 1,295 prisoners getting $9.1 million worth of credits during the 2008 filing seaso
Strong signs of a double dip exist in the mortgage backed securities (MBS) market as well. For example, 96% of 2010 Q1 mortgage securitzations were backed by the government (Fannie,Freddie, or Ginnie). i.e. very little appetite for investors to take credit risk in mortgages. sort of the polar opposite of what's been going in corp credit. However, corp balance sheets have for a long time been in much better shape than consumer, bank or government balance sheets (US and Japan can print money, but Greece cannot). Also, we have seen less mortgage bonds finding a buyer in recent secondary trading. Not sure if risk aversion due to impending FOMC announcement or Greece overhang. Mortgage bond trading stats here: www.empirasign.com/db/lm
I have been watching the talk about extending the extension for unemployment benefits and things still seem very on edge: http://www.politico.com/news/stories/0610/38650.html
The latest bill by the Dems once more looks to up taxes in order to pay for anything, but still doesn't pay for the aid to state and unemployment extensions. Together with a considerable hiking of taxes on oil companies they might yet again be unable to pass this and even if they did it would have to be reconciled with the House. At this rate they may not have any chance of getting the thing passed and have already made significant cuts. Together with what's going on in some state budgets it seems this whole thing is unwinding.
I think those numbers are far worse than they appear at first glance. The number of housing units sold may be equal to 1963 but the US population is radically different (188 million in '63 vs. 307 million in 2009). On some quick back-of-the-napkin-math, this puts today's housing numbers at about 39% BELOW 1963 when adjusted for population....
Is there something I am missing here? I am a little unclear what is holding retail, financials, and the dollar up after this news?
Because the US market makers want the market up right now, but not too much. Sort of a moderate risk aversion.
I think the news is just what us retail traders are given to support prices that have already been decided between much larger traders and political players. Not that they go thru and pick prices line by line, but they move the markets in general according to their own priorities: equities follow forex follow credit markets, in an ever-widening pool of ripples.
I think reporters (and analysts) pretty much see a market result, and then look for whatever news items they have at hand to use as an explanation. The DOW would still be slightly up right now, if the housing report had been good. And that would have been the explanation given for it.
Wow and the market's up 66 points...
The last time the chart dipped almost this low ('94) we were within a few months of the start of the greatest bull market in history. The chart is not predicting doom. If you are predicting doom, that's fine, but you'd better disregard this chart because it's telling a different story.
How do analysts have jobs when their guesses missed by such a wide margin?
Perhaps their regression models suffer from colinearity, heteroskedasticty, or just stupid fucking dependent variables. To be that wrong about something and yet still be called professionals stretches the definition of the word "credibility" in ways that would make even Noah Webster's dictionary flaccid.
Not only did they miss, but the data was manipulated (restated) by the commerce dept to make it look just tiny bit better than it was. This market makes no sense.
http://whengeniusprevailed.blogspot.com/2010/06/62310-midafternoon-repor...
so what? Truman knows about The Truman show
How many Trumans read Zero hedge.
Rest my case.
home builders were up for the day, huh....did someone start a rumor they would be building houses for Gulf Coast evacuees and the latest masive increase in oil volcano leak rate was bullish?
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Nice Post Tyler!! Actually I think we are going into the Double Dip now. It would not surprise me to look back 6 months from now and say May 2010 was the beginning of the 2nd recession. <a href="http://www.worldwidereferrals.pro/" target="_blank">Real estate</a> market is still such a mess and we need to find a market bottom. Obama needs to extend Bush Tax Cuts at least until 2014.