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Existing Home Sales Lowest In 19 Months, Cheapest Home Sales Tumble 18%; Weather, Student Loans Blamed

Tyler Durden's picture




 

Another month, another confirmation that the so-called housing recovery is sputtering on its last breath and is being held up entirely by the higher end segment, which however is also coming to an end now that wealthy Chinese have started liquidating their ultra luxury housing. In February, according to the NAR, some 4.6 million annualized existing homes were record, in line with expectations, and a 0.4% decline from the 4.62 million print in January. This was the 19th monthly drop in a row, and the lowest since July 2012, and a 7.1% drop year over year. But the worst news is that housing is increasingly unaffordable to the poorer Americans, with houses costing in the $0-$100 bucket down 18% from a year ago. Since nobody is applying for a mortgage any more this is hardly surprising. Finally, in addition to the usual weather excuse for weak housing sales, a new scapegoat has appeared: soaring student loans: "20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle." Oops.

 

The median home price remained largely flat in February at $189,000, and has continued on a shallow downward slope which peaked in mid-2013. Not helping things is that distressed homes – foreclosures and short sales – accounted for 16 percent of February sales, compared with 15 percent in January and 25 percent in February 2013.

 

Broken down by region, the bulk of activity was once again in the South, where 43% of all transaction took place, followed by the West, Midwest, and the Northeast in last place.

 

Looking at the supply side, we see that hardly unexpectedly, the months supply of condo soared to the highest in over a year, even as both signle-family and total housing supply rose as well.

 

But the scariest of all, was that as noted above, while the overall number of sales is still buoyed by the upper end, namely houses costing $500k and more, the lower end is being devastated, with sales of houses costing $0-100 and $100-$250K down 18% and 7.2% respectively, from a year ago. This also is hardly unexpected as all-cash sales rose again, and were 35% of all transactions in February, up from 33% in January. And for a sales distribution perspective, 89.6% of all sales were in the $0-$500k range, with only 10% of all sales accounted for the segment where prices are still rising.

What did the NAR's Larry Yun have to say about this latest disappointing number? Why it's the weather again, of course.

Lawrence Yun, NAR chief economist, said conditions in February were largely unchanged from January. “We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago,” he said. “Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year.”

Yet there was a new wrinkle in the explanation for weak sales, one which appeared for the first time: Student Loans!

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said student debt appears to be a factor in the weak level of first-time buyers. “The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges,” he said. “However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle.”

Brown notes the survey results are for recent homebuyers. “It’s clear there are other people who would like to buy a home that are not in the market because of debt issues, so we can expect a lingering impact of delayed home buying,” Brown added.

Expect the student loan issue, which is now well over $1 trillion notional across the US, to keep the US housing market subdued well after all the weather scapegoating is long forgotte.

Source: NAR

 

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Thu, 03/20/2014 - 10:30 | 4572166 wagthetails
wagthetails's picture

...Reality blamed.

Thu, 03/20/2014 - 10:35 | 4572185 Thought Processor
Thought Processor's picture

 

 

Rally on Garth.

 

 

They will never let reality get in the way of this manufactured market rise.

Thu, 03/20/2014 - 10:53 | 4572264 BKbroiler
BKbroiler's picture

No huge surprise, only expensive homes are selling because only the very rich can afford them. The home ownership/american dream scam to eliminate the middle class via pump and dump worked brilliantly.  The last thing any decently run politburo wants is some pesky independent thinking middle class between the ownership class and the serfs.

Thu, 03/20/2014 - 12:47 | 4573054 Miffed Microbio...
Miffed Microbiologist's picture

I have noticed in the 25-35 age range there isn't a high interest in home ownership today. My 24 yr daughter could afford a starter home but she much rather rent a room and not have the financial burden of being a home owner. Perhaps the years of watching us struggle to pay property taxes, dealing with leaky roofs and broken plumbing made an impression. Also that group isn't as family oriented because, in reality, they simply cant afford to be in this economy. If it weren't for the foreigners plowing money into this sector, which is ending, I can't see who will take up the slack.

Miffed;-)

Thu, 03/20/2014 - 10:53 | 4572273 smlbizman
smlbizman's picture

iheard this is the best time to buy....cant remeber who told me that....oh yea now i do...a real estate "agent"

Thu, 03/20/2014 - 10:55 | 4572285 BKbroiler
BKbroiler's picture

it is the best time to buy... a gun.

Thu, 03/20/2014 - 10:40 | 4572209 Sudden Debt
Sudden Debt's picture

Here's another reality show:

 

Worst thing about the state:

http://i.imgur.com/nkUJ8fq.gif

 

Best thing about the state:

http://i.imgur.com/gHauDqy.jpg

 

It makes sense... look, highest cocaine use => lowest obesity rate.

So what these pictures show is that cocaine is good for ya

 

Thu, 03/20/2014 - 10:41 | 4572217 Serfs Up
Serfs Up's picture

NSA transcript of 33 Liberty Street conversation in response to the news:

Uhhh...buy stawks!  Sell gold!!

Hurry!!!

There is no other rational response that I can think of at this point!

Thu, 03/20/2014 - 10:33 | 4572167 TruthInSunshine
TruthInSunshine's picture

Taper on now and until $0 POMO BECAUSE WEATHER.

Be prepared to hear this a lot as people scratch their heads and wonder would WHY YELLEN & FED NO MORE EASY PEASY QEasy.

Fed (Jeremy Stein) says "we are going to blow ourself up for real, at this rate of balance sheet expansion, bitchez!).

Thu, 03/20/2014 - 10:32 | 4572171 PlusTic
PlusTic's picture

Here's an idea:  tell the bond mkt you are going to raise int rates next year

that will help!  you stupid fukking woman!

Thu, 03/20/2014 - 10:36 | 4572191 TruthInSunshine
TruthInSunshine's picture

And then do it this year since inflationary pressures that can't be hidden by cheap parlor tricks are building a real, steady head of steam...

Thu, 03/20/2014 - 10:34 | 4572178 Sudden Debt
Sudden Debt's picture

Here's a interesting one:

HOW OLD IS THE AVERAGE NEW CAR BUYER IN EUROPE????

 

54!!!!!

 

NO KIDDING!!! YOUNG PEOPLE BUY SECOND HAND AND THE REST GET'S A COMPANY CAR!!

 

A friend who's a cardealer for Renault told me this. And this a cross brand trend.

And why 54? It's the age when people retire and their companies give them a big cheque for their retirment.

Thu, 03/20/2014 - 10:36 | 4572190 Winston Churchill
Winston Churchill's picture

I beieve it SD.

All the nice open sports cars here in Florida are driven by grey hairs.

Thu, 03/20/2014 - 10:39 | 4572204 Next to Arch Stanton
Next to Arch Stanton's picture

Perhaps that's when they land their first job?

Thu, 03/20/2014 - 10:34 | 4572181 TruthInSunshine
TruthInSunshine's picture

Taper on BECAUSE WEATHER.

Be prepared to hear this a lot as people scratch their heads and wonder would WHY YELLEN & FED NO MORE EASY PEASY QEasy.

Thu, 03/20/2014 - 10:35 | 4572186 Sudden Debt
Sudden Debt's picture

Just wait untill it's summer and the sun starts to shine warm rays...

It's going to be horrible for the economy...

 

Thu, 03/20/2014 - 10:37 | 4572197 101 years and c...
101 years and counting's picture

they already have their excuse for the downturn in spring: winter's high heating bills and the soaring price of food.  the drought in CA was a godsend for the central printers/excuse makers.

Thu, 03/20/2014 - 10:38 | 4572182 TruthInSunshine
TruthInSunshine's picture

Glitch in matrix. Sorry for 3x posts.

NSA, why you taunt me, bro?

Thu, 03/20/2014 - 10:35 | 4572189 Cannon Fodder
Cannon Fodder's picture

As I mentioned the other day, I have a "typical" corporate cube job, yet housing in my city is way out of my price range. Anything on the southern half of the city where most of the "good" jobs are located are in the $300-$400k price range. Who can afford that? Especially on a single income.... and with student debt? It's even worse for rent... $900 for a studio? Once again I think we are seeing housing becoming disconnected from the average workers ability to afford...

Thu, 03/20/2014 - 10:57 | 4572294 Mentaliusanything
Mentaliusanything's picture

And that is true in just about any country that has large International Banks who are dealers in debt to death. Still affordable in "Developing Countries"

When do we learn debt in not wealth and housing is a depreciating discretionary burden on income.

Answer: When the dream becomes a noose around your neck and the trap door opens

Thu, 03/20/2014 - 11:01 | 4572312 plane jain
plane jain's picture

Yep.  What can't sell won't sell.

median household income about $51K = median affordable home price $107K or affordable rent $850 a month

 

Thu, 03/20/2014 - 10:45 | 4572231 q99x2
q99x2's picture

I hope the prices keep falling for another 10 years.

Thu, 03/20/2014 - 11:03 | 4572325 foodstampbarry
foodstampbarry's picture

Ministry of truth is on the case...

Thu, 03/20/2014 - 11:07 | 4572342 JailBank
JailBank's picture

We all know the answer to the issue of too much debt. Moar debt please.

Thu, 03/20/2014 - 11:07 | 4572343 new game
new game's picture

price is a killer and it has to come back down or we in an epic shift of ownership to serf/renter society. guessing the later, as the winners are landlord and serf ussually rent...

thank your leaders(sociopathic liars) for this situation, orchestrated to their benefit.

if only markets could operate freely....

Thu, 03/20/2014 - 11:34 | 4572504 justsayin2u
justsayin2u's picture

I smell a new gubbermint plan to buy votes here - government backed loans, non-dischargeable through death or bankruptcy, that extend student loans by up to $500k to cover a 1st home purchase.  Inter-generational debt slave 4everloans.  With HELOC provisions.

perfect.

Thu, 03/20/2014 - 11:51 | 4572683 kw2012
kw2012's picture

The cash buyers are disappearing. Homes are more unaffordable for the average American and will be less so with ObamaCare sticking its hands in everyone's pocket regardless if you bought on the exchange

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