Existing Home Sales Miss; Worst Start To Year Since 2007

Tyler Durden's picture

After 6 months of missed expectations, last month's fragile beat of dismal expectations (even though it was the worst existing home sales SAAR in 21 months) provided just enough of a glimmer of hope to stoke more short squeezes in homebuilder stocks and strengthen the pillar of the US economic recovery. Now we are in April... the start of the key seasonal selling season... and existing home sales rose modestly MoM (but fell for the 6th month in a row YoY) and missed expectations. There is - simply put - no post-weather bounce.. and still NAR is blaming slow April sales being delayed due to Winter weather! This is the worst start to a year since 2007.

7 of the last 8 months missed expectations

 

This is the 6th month in a row of slowing year-over-year sales

 

This is the worst start to a year since 2007...

 

Some disturbing trends:

  • Existing-home sales in the Northeast are 6.3 percent below April 2013
  • Existing-home sales in the West are 10.0 percent below a year ago
  • Existing-home sales in the Midwest slipped 1.0 percent in April to a pace of 1.03 million, and are 9.6 percent below a year ago
  • Existing-home sales in the South are 3.5 percent below April 2013

The details continue to show that the "normal" housing market continues to disappear, with the bulk of existing housing made simply to serve investors and flipping speculators :

  • 5.9 months supply in April vs. 5.1 in March
  • Inventory rose 16.8% to 2.29m homes
  • 1st-time buyers 29% of total sales; all cash 32%; investors 18%
  • Distressed sales 15% of total sales; of which
  • foreclosures 10%; short sales 5%
  • Median home price rose 5.2% from last year to $201,700

First-time buyers continue to represent fewer than one-third of all buyers at 29 percent in April, down from 30 percent in March; they were 29 percent in April 2013.

All-cash sales comprised 32 percent of transactions in April, compared with 33 percent in March and 32 percent in April 2013. Individual investors, who account for many cash sales, purchased 18 percent of homes in April, up from 17 percent in March; they were 19 percent in April 2013. Seven out of 10 investors paid cash in April.

In short: all hail America's landlord Blackstone!

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LawsofPhysics's picture

That's not how CNBC is spinning the "data"...

 

http://www.cnbc.com/id/101697101

 

I am more equal than others's picture

 

 

Low interest rates have been played out.  Now wait a bit and then decline.  Bigger and faster decline.

Rollercoaster....yeah

synergize's picture

LOL - little footnote in that article (3rd pargraph down):

"Compared to April last year, sales were down 6.8 percent. "

Guess you dont want to emphasize that CNBC, eh?

Good data in - garbage out

Australian Economist's picture

It gets better

 

"And there is reason to be optimistic. The inventory of unsold homes on the market increased 6.5 percent from a year-ago"

 

More houses going unsold? Sounds bullish to me.

 

madcows's picture

Boy is that a crap article.  First thing, it quotes the NAR.  That bastion of good, honest, and true realty information (propaganda).

Second, the "causes" for the slump are the lack of homes, interest rates, and cost of homes BUT, the future is bright, b/c more home are coming on the market... and the economy is strengthening.  Cue the HOUSING RECOVERY MUSIC!

 

Clueless Economist's picture

CNBS headline:

Home Sales Rebound

ZH is wrong again

--Dr Krugman

LawsofPhysics's picture

Boy I certainly hope that "deflationary collapse" hurrys up and gets here soon.  The cost of feeding my family, educating them, keeping them warm, and keeping them healthy is killing me.

j0nx's picture

Tell this data to the NoVa area as home prices in desirable locations continue to climb straight up and $650k homes have multiple offers in days. What a crock of shit from my standpoint.

Doña K's picture

The beltway bandits area had always been pricy. Those who are feeding on the .gov contracts and where all the ex military high brass hang out lobbying. 

disabledvet's picture

"Ex military"? "Hanging on to that ex credit rating with a wing and a prayer"?

Once the last bubble bursts we'll see a generalized default ("Detroit writ large.")

I did see the Silver Line has blown out all budget projections and the entire management team has been let go.

CrashisOptimistic's picture

I have discovered the correct reply to assurances "everything is going to be okay."

 

The correct reply is . . . when?

Smegley Wanxalot's picture

Clearly more printing is necessary to generate confidence and productive activity.

what's that smell's picture

stupid humans!

don't you know the algos don't give a flying fart about your home sales?

BTFD!

intric8's picture

Yet prices have risen out of reach of many americans. Our marvelous fed is handing asset inflation to the rich, price inflation to the poor! (formerly known as the middle class)

Moneyswirth's picture

No worries.  This will pick up once DC bails out all the deadbeat millenials with past due student loan debt.  Then they go out and get loans to buy houses.  Problem solved

tiger uppercut's picture

This is absolutely what's going to happen. Free shit giveaway 2014.

ebworthen's picture

Past due, seeing as .gov gave banks/insurers/corporations almost $1 Trillion in 2009, and have slathered them with nearly $1 Trillion per year in QE.

I calculate they owe each of us $3 Million tax free.  That ought to take care of student loan debt, underwater mortgages, and retail sales.

Of course if people act like Wall Street, they'll take it to Vegas and gamble on 30 to 1 double sixes bets, and be called "heroes".

intric8's picture

That is a provocative thought, that financial recklessness on an individual level is punished quite severely, but on systemic and macro levels it is forgiven and even reimbursed! I'd like to elevate to that level as well, but engaging in the tradecraft of financial theft with fed sanctioned scuzzbuckets, crooks and charlatans is beyond what my petty mortal heart can bear. I'd rather keep eating my instant noodles and still be able to look myself in the mirror each day.

FreeNewEnergy's picture

Note how all-cash buyers are also slowly drifting away. When they're gone, it's game over.

As a side note, BofA still hasn't moved their foreclosure against me forward... since March 2010. They seem to have given up.

I smell blood in the water.

monopoly's picture

Good for you Freene. I hope that bank just dies.

FreeNewEnergy's picture

No. Rochester, NY. But I may move to Vegas after I get the house free and clear. Two more years, I figure, possibly less, should BofA go tits up (I know it's a long shot, but why the fuck not? They're upside-down as it is.).

I hate to admit it, but my dad passed away in July 2009, and since then, the bank has taken very good care of me. I live in Banksta Paradise™.

fonzannoon's picture

One of my good buddies lives in Webster. Nice area. He had a fortress built up there for like 250k. Taxes are obscene for the prices and the weather is cold as shit. But this time of year it's beautiful up there. I like going into the city when I visit for beers. Nice to drive right into a city and park right in front of the place you are going to.

FreeNewEnergy's picture

Yeah, fonz, the nightlife in Rochester ain't much, but it is very accessible. Lots of good honkey tonks near the Eastman School in downtown, like Moe's, the only smoking bar in the county, I believe. If you're ever up this way, give me a heads up. I'd love to have a few drinks and laughs.

My place is in Irondequoit. The city is a six minute drive. Pretty convenient, but alas, also too close to high crime areas. Webster is excellent. I spend a lot of time near Newark, a little further out. Very rural, peaceful, and cheap. The weather is beginning to get to excellent phase. Too bad it only lasts about 4 1/2 months.

Miffed Microbiologist's picture

The only problem is living sustainably in a desert. Lake Mead's water level is quite low and at some point nature may reclaim Sin City. Facing severe drought in San Diego has made me question my own plans as well.

Miffed;-)

Hal n back's picture

ever look at how much  in resources Vegas wastes?

 

Electrivity usage, water features and pools everywhere in multiples.  Jets of all sorts flying in and out all the time. Street gridlock. Its an environmentalists nightmare.

 

 

I Wonder why the climate change/global warming/tree hugger folks do not go after vegas?

 

disabledvet's picture

They don't produce any of their own resources (save silver.)

If there's a hyperinflationary shock it'll hit Nevada first. The price of ice has already soared.

madcows's picture

32% of all sales are cash.  That can't be just individuals.  Only the 1% has enough cash to buy a house with cash.  That has to be investment buys by large funded collectives... I take it that these investors are pulling out of the stock market (as it is at a top), and putting it into Realty.  They certainly can't put it into bonds or cash.  Those are losers, too.  The cash buyers know it's a renter nation and it's going to get worse when the markets implode.  they're just setting up the next wealth transfer.

 

 

FreeNewEnergy's picture

Those all-cash sales were 40% of the market a few months ago. Those such as Blackrock are finding out that being a landlord is a loveless task, especially when renting to people on the edge of bankruptcy. I'd love to know what the default rate is on the houses they've turned into rentals.

Interest rates remain low, but the median sales price continues to rise. Of course, real estate is all local. Around upstate NY, the low-end is getting very, very cheap, in the cities and out in rural areas. Upstate NY is depressed by high property taxes and limited job growth, making it one of the most affordable areas in the country. Rochester, NY was #10 in a recent survey on home affordability.

This will come as a shock to some, but very nice, well-built colonials and cap cods in Irondequoit and Greece - two suburbs north of the city - can be had for under $90,000, some well under. But the property taxes are killer, unless you're 65+, in which case you get a huge (like, $65k) reduction in your assessment under what we call the STAR program. Realistically, if you buy a home around here for $80,000, and are over 65, you pay tax on an assessment of just $15,000. I'm toying with the idea of shared senior living on a large scale, using the government's own policy against itself.

Rochester, NY suburbs could become Boca of the North.

tgmur10's picture

"I'm toying with the idea of shared senior living on a large scale, using the government's own policy against itself."  Will only work if you transfer title for Enhanced Star Exemption but I like your thinking.......  Paying large on L.I. !!!!

greatbeard's picture

>> all-cash buyers are also slowly drifting away.

Prices have gotten too high for those folks. There are very few viable deals.  I have 25 or 30 properties on my search list that sold for $65K, plus or minus $10K, in '11 and '12, that are now asking in the high $100K range, with no renovations.    I have at least a dozen that sold in the last year or less than are now asking double what they sold for.  The amazing thing is so many of those homes, which I thought were so outlandishly marked up they would never sell, have sold, or have contracts on them.  I'm simply not going there.

In contenplation of a move, I put my house on the market at what I initially thought was a fair mark up, paid $58K, put $30K into it, put it up for $125K.  It was like throwing liver into a shark tank.  I quickly realized I'd make a mistake and pulled it off the market but two people who looked at it won't take no for an answer.  A month later both of them are trying to convince me to sell it to them at $150K.  The problem is, I now see, in our market, it would be difficult to replace for $200K.  There is simply no way this place should be worth more than double what I've got into it in less than two years.  That is not a healthy market dynamic and can't continue.

fonzannoon's picture

why not take the money and rent if you think it can't continue? Grab yourself something on Central park west after the reset.

Dingleberry's picture

Probably because you gotta live somewhere, and rents have really inflated (despite fed denials).

Plus, used to be you could park your "profits" from house selling into a nice little short term CD for 5%.

Can't do that anymore either. So yes....I would stay put too.

Regardless, this market is going one way. The fed can suspend reality.....but eventually reality will take over.

Enjoy the slow train to economic hell.

greatbeard's picture

>> ake the money and rent

A lot of reasons.  It's my perfect crib.  Five acres, fruit trees, gardens, pasture, ideal location, nicely renovated home, free and clear.  And, since I bought it for a pittance (compared to neighboring properties), my taxes are set at a low $700 a year.  And it's an ideal spot for my dogs.

I said it can't continue but I'm clearly wrong in that reguard.  It can continue, I just won't participate. Even if my place were to sell for $200K and I bought another for $200K, my taxes would reset to the mid $3K range.  That in itself makes it unplatable. 

I was wanting/willing to move if I could take a meager profit out of this place and buy another renovation project.  Beings as I'm long term unemployed/retired, making $10 an hour, plus free housing while I do a project, is just fine for me.  But there are no more value priced renovation projects on the West Florida market that I can find.  Everything is priced to perfection.

So, after a reassement of the market, I've decided the best thing for me to do is keep what I've got.  Living is darned cheap here and the quality of life can't be beat.  I'm going to buy another RV and do some more traveling locally.  I can grow my gardens/fruit in season and do my canning/preserving, then get away for a month or so in the RV when I'm not doing the hobby farm thing.  Being located in North Florida I can range from New Orleans to Tennessee to the Outer Banks and the Everglades without running up astronomical fuel bills.  I camp remote, cook my own meals and entertain myslelf by hiking and enjoying nature so my travel expenses are really minimal.

So, in a nutshell, although I would have liked to replinish my nest egg by doing a bit more flipping, economic reality is telling me to enjoy what I have for now.  If the situation changes, I'll change.  If I keep what I have and the market continues to surge, I'm good.  If I sell and rent, and the market continues to surge, I'm fucked.  I'm just playing it safe, IMO.

 

 

 

fonzannoon's picture

well if it's your perfect crib, that says it all. Not many can say that.

nuclearsquid's picture

Here is an idea...

get it assessed, then get a Heloc.

Then plow those dollars into lending club loans (infinite leverage)

$$$ Profit!!

what could go wrong?

 

tip e. canoe's picture

as long as you got ample water, $200k for a solid home on 5 acres with maturing fruit trees and a fertile garden & pasture is going to turn out to be a steal of the century before this is all over.
imho, you're right to sit beard.
not yet time to reap what you sowed.
sit back and enjoy the fruits.

greatbeard's picture

>> as long as you got ample water,

Water we do have, as well as some very fertile ground.  This area is well known for springs and cave diving.  I know over the last 50 or so years the springs are way down but I don't see my access to well water being a future problem.  And in a state known for sandy soil I'm fortunate to be in an area of nice, black, rich dirt.  I'm surrounded by crops and orchards.  It really is an idyllic spot if one must be stranded.

Max Cynical's picture

Is is so hard to reference the area you're talking about? I like this kind of "man on the street" info but it means nothing if you're not going to be silent about its locale.

greatbeard's picture

>> reference the area

Sorry bro, I've rambled on about this stuff so much I assumed anyone who cares knows.  My current property is in North Florida, NW of Gainesville.  My target shopping area was from south of Tampa to Ft Myers.  Hope that helps.

Dingleberry's picture

I thought about moving to coastal NW Florida, but mother nature seems to use it as a bowling alley with hurricanes.

Maybe the Atlantic side.

greatbeard's picture

>> coastal NW Florida,

AFA hurricanes go, the area from Crystal River to Applachacola really isn't a bad area.  Hurricane's have a natural arc to their trajectory and the really big storms don't, in general, seem to be able to make the turn into the big bend area.  Applachicola and west, yes.  I don't live in fear of hurricanes, I just make sure now not to live right on the coast.  I'd rather drive to the water when I want it.  Flood insurance is going to change radically over the next few years and I'd think twice about buying anything that require it.  Even if you self insure, like I do, it will still greatly impact your resale value.  Stay back off the beach and the barrier islands.

Bosch's picture

No one wants to buy anything on the coast because everyone now knows that those homes will be underwater in 3 years.  Or 5.  Maybe 10, but shit, could be 100 years, who knows.  Point is,  shitty home sales numbers are the fault of global warming. 

Bosch's picture

But wait, it was too COLD to buy a home?  Hard to keep all this erratic climate straight. 

insanelysane's picture

This climate change stuff is so new, of course you need to ignore the fact that there was a major ice age, warming, a mini ice age, and warming.

Kaiser Sousa's picture

fucking CNBS...

just heard this dumb ass bitch named diana say that "it was housing that got the US into this mess, and its housing that's gonna get it out of this mess"...

u couldnt make these propaganda points up if u tried..but they can.

 

 

 

Grande Tetons's picture

Some bimbo on Bloomberg...mentioned a year or so ago that Japan was going to show us the way...out. She never said what out meant or out of what. But, she did I have a nice rack. 

Tinky's picture

 

She was channeling an all-time great:

"If stupidity got us into this mess, then why can't it get us out?"

 – Will Rogers

 

NDXTrader's picture

Our global overlords have declared this an UP day...and the people rejoice