So Much For Housing Optimism: Existing Home Sales Miss, Drop To Lowest Since November, Order Cancellations Surge

Tyler Durden's picture

Remember that surprisingly strong home starts data from yesterday which drove the market by 100 DJIA points higher yesterday? Neither do we. According to the NAR, June existing home sales once again declined, this time to 4.77MM from 4.81MM, the lowest since November, and well below the expected rise to 4.90MM. This number was 8.8% below June 2010's 5.23MM. Total inventory increased by 3.3% to 3.77 million units, or 9.5 months of supply at the current sales rate up from 9.1 in May. The biggest question mark is the surge in order cancellations which soared from 4% in May to an unprecedented 16% in June. That's one in five home transactions being cancelled in the middle of the deal. Here is Larry Yun's explanation for this shocking development: "The underlying reason for elevated cancellations is unclear." So let's get this straight whenever the number is better than expected it is always due to the economic recovery. When it is worse, it is "unclear." Thanks Larry. Now go back to fudging data please.

More from the traditionally irrelevant and discredited NAR:

Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

The national median existing-home price2 for all housing types was $184,300 in June, up 0.8 percent from June 2010. Distressed homes3 – foreclosures and short sales generally sold at deep discounts – accounted for 30 percent of sales in June, compared with 31 percent in May and 32 percent in June 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said home sales should be higher. “With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales,” he said. “Even with job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals. Although proposals being considered in Washington could effectively put more restrictions on lending, some banking executives have hinted that credit may return to more normal, safe standards in the not-too-distant future, but the tardiness of this process is holding back the recovery.”

All-cash transactions accounted for 29 percent of sales in June; they were 30 percent in May and 24 percent in June 2010; investors account for the bulk of cash purchases.

First-time buyers purchased 31 percent of homes in June, down from 36 percent in May; they were 43 percent in June 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in June, unchanged from May; they were 13 percent in June 2010.

Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June, but are 7.4 percent below a 4.58 million pace in June 2010. The median existing single-family home price was $184,600 in June, up 0.6 percent from a year ago.

Existing condominium and co-op sales fell 7.0 percent to a seasonally adjusted annual rate of 530,000 in June from 570,000 in May, and are 18.0 percent below the 646,000-unit level a year ago. The median existing condo price5 was $182,300 in June, up 1.8 percent from June 2010.

More made up "facts" can be found here.

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Cassandra Syndrome's picture

But, but, but... bitchez

eureka's picture

Ref. "Bloomberg" - and cross-Ref. "whenever the number is better than expected it is always due to the economic recovery. When it is worse, it is "unclear" -

Whenever numbers go down, all blowhorn sounds bites ubiquitously say UNEXPEDTEDLY.

Yes, folks, all things are expected to only go up - in the unreal and illogical world of market pumping and absolute commitment to naked bullshitting. 

In Zero-Truth-HomeLand markets don't "climb walls of worry" - they pump for the dumb - who not only don't expect, but don't know, any reality - but only what the screen on the wall tells them. Mirror, mirror on the wall, who's the fairest of them all?

Denial, denial, denial - thy name is usa.

Smiddywesson's picture

Yes, it's evidence of SOR2 (Summer of Recovery Part II), now run along and buy some stocks.

digitalhermit's picture

More like SORE - Same Old Rape Experience from the TPTB...

Thisson's picture

Just wait till next month when this month's 18,000 new jobs created number gets revised downward....lmao

Cpl Hicks's picture

You mean it could get worse?!?!?

Xibalba's picture

lemme guess....Markets rally on renewed QE3 hopes now? 

Clueless Economist's picture

Lawrence Yun not only fudges the data, but he is a closet fudge-packer.

Arius's picture

bring back David Lereah ... the eternal optimist

Boston's picture

Larry Yun is a clown.  Here's what I wrote to him in an email back in 2008, after he described the housing market as a glass that's half full:


"Some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half"  

WHAT????  How, after these past two years, can you still imply that that glass might possibly be half full?????  (notice your choice of the words "some" and "others").  What you're doing is not much different from saying that--on sinking ship with 100 passengers where only two survived--"some survived and others died".  You're shamelessly misrepresenting the big picture, irresponsibly talking down the scope of the actual disaster.  As you should know (presumably), the data strongly suggest that we're witnessing what's rapidly becoming the biggest housing bust since the Great Depression, and yet, you feel the need to state that there are markets in the US that are not imploding!?  OK, you may be correct on this point--but that's the least important conclusion!!!

After two years of humiliating, quarter after quarter, downward revisions, the public should trust your predictions less than those coming from Bozo the Clown.  Like any other professional (and I'm being generous here) who fails miserably, why can't you just resign, and let the NAR bring aboard someone who even remotely knows what he (or she) is doing?  At the very least, please stop spewing your pathetically inaccurate projections and misleading analyses.

He actually replied with some nonsense about my not knowing what I'm talking about!  Keep in mind this was 2008.

For anyone interested in contacting Larry today, here's his email:

For anyone interested in sharing their thoughts with Ron Phipps, also a clown, here's his email:


Smiddywesson's picture

It may be worse than just a corrupt liar spewing nonsense.  They may actually believe their nonsense.  The quote I liked best was:

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said home sales should be higher. “With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales,” he said. “Even with job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals.

This is equivalent to Ben Bernanke says we don't really know why the economy isn't reviving.  Phipps' views the world from his Warwick RI real estate broker's perspective.  It is not that he is selling overpriced financial death traps during the Greatest Depression, it's the lack of easy credit, presumably due to evil bankers.  It never occurred to Phipps that banks won't lend because it is stupid to buy a house today.  The smart people who need housing are sitting on the fence like buzzards waiting for a deal.

trav7777's picture

bottom line, way too many houses, not enough income.  Simple.

These idiots don't seem to understand that construction growth outstripped demand and the margin was a gigantic speculative bubble.

Prices are set at the margins by slack capacity.

And yet these fuckin HBs continue to go out and build...just insane.  There are those in middle age right now who remember very clearly the 20/80 lending rule and other DTI hard-and-fasts.  These could only be relaxed during a one-way price trend.

Buying a house right now is a gamble against your entire down payment with what in return?  You have to really sit down with an accountant and compare the NPV of the cashflows of owning (with the MID tax break) and renting.  Even if renting is a lower NPV, compare the VaR.

The housing market now is a classic case of where expected value analysis must be performed. 

equity_momo's picture

Im in the process of moving. I can afford to buy a house clear or i can put that fiat into gold and rent and wait. Generally though the rentals within my budget are awful and yet oddly the houses to buy in budget are great. I know prices will get cheaper but what would your advice and the average ZH reader do?  I do believe you are born short housing , so im short.  I just dont know what will happen to property taxes and insurance - well i know theyll go up but how much...

Oddly , land in many decent areas is still relatively very expensive. The dream of building your own home works out twice as expensive as buying from a realistic seller ,  once you factor in land , architects , utilities etc.

Smiddywesson's picture

I can afford to buy a house clear

If you believe they are destroying the currency, and that we have reached the point of no return, then the answer is easy.  Save your down payment, and put the rest into PMs.  When inflation goes vertical, buy the house and pay it off in funny money later.  The time you sit waiting for the inevitable crash in the USD will get you a better price on a house because prices are unlikely to rise.  You get the house AND a big nest egg.

PS:  Hyperinflation happens fast.  You have to be prequalified and you have to keep looking at available inventory so you can buy when events tell you it is time.

equity_momo's picture

Smiddy , i agree but get this : im self employed and cannot get a loan.  I wont go into nominal figures but im only after a modest sized house in a rural but relatively affluent area. Ideally i wanted to put down 80% and mortgage just 20% leaving me about 40% value of that purchase in liquid savings (ie i have 120% of the purchase price now)  I explained this to the mortgage provider - i have a few years worth of savings after any purchase.

They didnt want to know.

That tells me all i need to know about the housing market. Its frustrating. But there it is. I have to buy free and clear and have a vastly reduced amount of PMs or i just rent in an overpriced hole.  I do not want to compromise and move into a cheap , dense , neighbourhood so it looks like i have to find a very distressed seller.

trav7777's picture

this is the cash flows, then compare expected VaR.

You have to do some outcome cases where you say, ok, home goes down by 10%, what are the odds, home goes up by 10% what are those odds, to see what your expected outcome is.

I think the probability of price increases are low.  The odds that they stay flat are higher and the odds that they go down are higher still.  Compare that versus your expectation on PMs, the cash flow difference, etc.  You may still reason that buying is a good idea.  Or you might not.

equity_momo's picture

Sensible but i have a feeling we are in unparrelleled waters. There are alot of variables in this analysis - 10 to 15 years ago it was straight forward with fewer variables (we would probably be comparing stocks with housing rather than PMs with housing) but now i cannot compute how Gold will act in a hyperinflationary depression or in a deflationary systemic collapse. I have a firm handle that the dow-gold ratio goes much much much lower in either scenario (from 8 currently to say 2) therefore i have to believe housing follows stocks closer than gold.

I think ive answered my own question : if i could find a nice rental that was priced right , i would move in immediately. Ive sacrificed alot to get into this position , i guess i have to sacrifice more by living in overpriced rentals a bit longer.

Anyone have a nice rental at the right price an hours drive from Denver?

equity_momo's picture

Id rather waste my free time here than sending those couple of clueless cunts an email.

snowball777's picture

I didn't think the NAR was capable of reporting a decline.

Larry Darrell's picture

they just have to spin it

This was unexpected.  Must be transitory. Etc.

Cognitive Dissonance's picture

Missed it by >that< much.

Could have missed it by   >    that    <   much.

#Winning by #Spinning

wisefool's picture

It can report a decline if Americans are not patriotic enough. This is their radio campaign in my area. True American patriots are willing to go up to their ears in debt on a McMansion to increase the GDP and save the country.

No joke, they are really running those (paraphrased) ads on the radio in my area.

trav7777's picture

the miniplenty will soon rectify these numbers via the minitruth and you go to Room 101

StychoKiller's picture

How much rent does miniplenty charge per month for Room 101?  I know lots of people that should visit the rumpus room...

Stoploss's picture

Heh, he ,he. I can literally smell the bullshit coming off the monitor.

slaughterer's picture

Once it reaches 4.0 million we will be safely inside QE3 territory.

SheepDog-One's picture

DANG and Case/Schills just said 'No housing double dip'!

Well I guess in a way they were telling the truth, cant have a double dip when we never got out of the first one.

Fred Hayek's picture

As Reggie Middleton at Boom Bust Blog has pointed out, the Case Shiller index is a woefully incomplete measure of the housing market.  It specifically excludes condominium sales and any sales out of foreclosure. 

Charts that Middleton presented showed that the Case Shiller index pretty consistently lagged 6 mos. or so behind overall market price changes. 


Rainman's picture

This " underwater " chart tells most of the story for the future...14 million mortgages under water, with nearly half under water by 30+%

trav7777's picture

nevermind the vacant supply overhang.  There are many millions of homes that are unsaleable for anything but a loss.

Who breaks for the exits first and starts the stampede?  That's got to be the fear here.  Anybody says fuckit and pulls the ripcord, the avalanche starts.  The market will clear but it will be a very brutal few years while it does.

TruthInSunshine's picture

I  agree with everything you've said, Trav.

Another massive factor coming down the pike is that the overhang of homes that's recognized officially is dramatically understated, due to the complex title, MERS, robosigning issues, and ALSO due to the fact that banks now servicing mortgages or proclaiming to hold the underlying note DO NOT WANT to foreclose, as they would damage their value or impair their solvency (by being forced to realize a loss) and/or they can't prove bona fide ownership and/or the value of the not is PERMAMENTLY impaired (i.e. they will never, ever NOT lose money on the asset at this point, no matter how long they wait) and they will literally give the house away to the government or any entity.

In just the first 6 months of this year, 1.7 million new foreclosures entered the pipeline, but that number should have been 2.7 million dwellings (take you guess as to the reasons why - see above).

Foreclosure Glut Pushes Filings Into 2012

By Jeanine Skowronski

NEW YORK -- Approximately 1.7 million properties entered some stage of foreclosure during the first six months of 2011, according to RealtyTrac, a group that monitors the foreclosure market.

However, that figure is artificially depressed, thanks to persistent paperwork problems with mortgage servicers and a sluggish housing market. The numbers, RealtyTrac says, should actually be much higher.


"We estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later," James Saccacio, CEO of RealtyTrac, said. "This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number."

trav7777's picture

everything about the housing market is crisis control.  They have to hope they can trickle this into the market so that the downturn is slow and less-noticed.

Robslob's picture

I do not think algos read headlines at all...the just use daytrader vol to pump manageable yet unrefined...

the not so mighty maximiza's picture

even if they dropped pricing 20% more,  real estate will not get out of this funk.

HelluvaEngineer's picture

heh, wait until financing is no longer available

Long-John-Silver's picture

Why buy the house when the government lets you squat in it for free?

Social Justice Bitchez!

Thisson's picture

Maybe, but if it drops 80% I'm a buyer.

TruthInSunshine's picture

I would wait for at least a 90% reduction.

Fools have been rushing in, mostly cash investors, looking to rent. As much as a full 50% of existing home sales have been either foreclosures or short sales.

I do wish them well and hope the non-primary residence property taxes, insurance, maintenance and other costs don't sink their expectations.

Property taxes and other heavy carrying costs associated with real estate is the anti-dividend.

Smiddywesson's picture

Very well said.  However, whether the buy point is at an 80% reduction, or a 90% reduction won't be determined by us, it will be determined by the death of the currency.  When inflation picks up speed, real estate is going to look real good.  Buy a casa, and pay it off with confetti.

trav7777's picture

No, it won't.  If you can get the taxes paid, sure.  But this is a different era than previous ones.  The Party slaps a sticker on the front door and it's a bagel.