This page has been archived and commenting is disabled.

Another Housing Red Light: Furniture Spending Negative For The First Time Since 2012

Tyler Durden's picture




 

When nearly two years ago everyone jumped with joy after the US housing market posted its latest uptick, the fourth since Lehman, with all previous three promptly fading as dead cat bounces always do, the permabulls were quick to bet that "this was the recovery we've all been waiting for", ignoring such simple concepts as QE3, the record scramble by foreign oligarchs to use US real estate as a dirty money laundry, the Fed's housing subsidy with REO-to-Rent (which promptly made Blackstone into America's largest landlord), and the fact that banks then (and now) still refuse to dump millions of foreclosed homes back on the market over fears what the supply surge would do to prices. We noted all of this at the time, and said it was only a matter of time before this 4th consecutive dead housing bounce fizzles.

Now, that we have seen nearly a year of declining existing home property prices, a collapse in transaction volumes, and a new home market that is catering solely to the rental segment, this has been confirmed.

But that's not all. 

As we showed a week ago, it is not just the coincident housing signals confirming that the latest artificial bounce has faded, but both upstream and downstream indicators. Specifically, we showed that lumber prices - that one component so critical in the building of new homes and a traditional leading indicator - have cratered.

 

That's the upstream indicator.

As for the downstream, we go to Bank of America which finds that not only has home improvement store spending declined substantially since the dead housing bounce peak last summer, but that furniture spending according to BofA estimates, is now once again negative: the first such drop since early 2012.

From BofA Michelle Mayer, who very soon will also have to change her tune from 2012 proclaiming the housing collapse over and a recovery is just beyond the horizon.

Spending in home improvement stores ticked up in May, but the pace of spending on a yoy basis has slowed substantially from the cyclical peak in November 2013.

 

 

Spending at furniture stores had picked up over 2012 through early 2013 but has been on a downward trajectory since last fall. Sales actually slipped into negative territory on a yoy basis in May, showing weakness into the spring season. This weakness is consistent with a wide array of indicators on the housing market, including Census Bureau's new home sales as well as weak household formation data.

 

But what by far worst for reality deniers is that with QE fading, there will be no additional stimulus to push all important housing away from the upcoming drop and into its fifth "dead housing bounce." Unless, of course, the Fed has no choice but to untaper and unleash even more trillions in liQEdity once the latest version of QE (we forget if it is 3 or 4) ends and is found to not have generated any "self-sustaining", escape velocity growth in the US economy yet again.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/10/2014 - 13:14 | 4841085 knukles
knukles's picture

So this means I don't get drunken Uncle Bud's ratty smelly couch he promised me?

 

i think i remember a dirty damp mattress in the alley way behind the bar the other night when i was puking... maybe its still there....
Betcha them little 6 y/o mehikans is gettin' better sleeping conditions than them spikes out front the city hall....
maybe i cana raid hte dumpster behind the book store for then trashed hillbillary books for warmth....

Tue, 06/10/2014 - 13:15 | 4841107 Pladizow
Pladizow's picture

Silly Tylers, have you learned nothing over the past 5 years?

Red lights are green lights!

Tue, 06/10/2014 - 13:43 | 4841220 Obama_4_Dictator
Obama_4_Dictator's picture

Bummer my Wife works for IKEA......

Tue, 06/10/2014 - 13:50 | 4841253 quintago
quintago's picture

Home sales (quantity) go down, furniture goes down. I agree prices are ridiculous, but these charts don't demonstrate anything.

Tue, 06/10/2014 - 14:09 | 4841338 RevRex
RevRex's picture

I just got some new furniture, a nice two piece creme living room set.....they don't smell and have no visible jism stains on them either, even under a blacklight......

Tue, 06/10/2014 - 14:29 | 4841442 0b1knob
0b1knob's picture

Furniture spending negative?

Wouldn't that mean that people are selling their furniture?

Tue, 06/10/2014 - 15:39 | 4841721 NotApplicable
NotApplicable's picture

Which means that someone is buying.

It's a paradox!

Tue, 06/10/2014 - 19:01 | 4842289 nightshiftsucks
nightshiftsucks's picture

Let me fix that for you.....your wife used to work for Ikea.

Tue, 06/10/2014 - 16:05 | 4841787 Jumbotron
Jumbotron's picture

"Silly Tylers, have you learned nothing over the past 5 years?

Red lights are green lights!"

 

So does that mean we Zher's suffer from reverse color blindness?

Tue, 06/10/2014 - 15:50 | 4841756 Bemused Observer
Bemused Observer's picture

Tell Uncle Bud you'd rather have the 19th century gun rack, or some of the childhood toys he kept...

Tue, 06/10/2014 - 13:13 | 4841097 Bear
Bear's picture

Retail furniture spending may be down but Craigslist spending is up  ... maybe people getting rid of the stuff they purchased last year?

Tue, 06/10/2014 - 13:13 | 4841100 NoWayJose
NoWayJose's picture

The furniture makers need to take a note from the cell phone makers - build your products to fall apart every two years.

Tue, 06/10/2014 - 13:16 | 4841110 i_call_you_my_base
i_call_you_my_base's picture

You haven't bought furniture in a while, have you?

Tue, 06/10/2014 - 14:14 | 4841363 greatbeard
greatbeard's picture

>> bought furniture in a while,

I have a Scan Design leather and teak living room set that I bought used over 20 years ago.  Granted, it was less than a year old when I bought it, but the stuff is nearly 25 years old and still going strong.  At the time I nearly choked on the price, 50% of what my friends paid. 

Tue, 06/10/2014 - 13:21 | 4841127 the not so migh...
the not so mighty maximiza's picture

well fuck ya, milk crates are cheaper

Tue, 06/10/2014 - 13:24 | 4841141 yogibear
yogibear's picture

Obama can initiate building of ghost cities and malls to spur construction.

Maybe the Federal Reserve can start buying lumber and stockpiling it.

Better hurry Obama the election in November is approaching quickly. 

Tue, 06/10/2014 - 13:29 | 4841155 CPL
CPL's picture

http://www3.nhk.or.jp/nhkworld/english/news/20140610_11.html

Shit hit the fan in Japan with Fukushima, everyone literally just shut up at the same time.  Which has never happened.  Ever. 

Tue, 06/10/2014 - 13:31 | 4841161 LawsofPhysics
LawsofPhysics's picture

Bullshit, anyone else been following the price of timber?  It's way up in most categories, but especially the quality hardwoods used for making decent furniture.

 

Cypruss for new hives is just plain silly.

Tue, 06/10/2014 - 13:32 | 4841171 orangegeek
orangegeek's picture

really?  look at a lumber chart right now - was at 380 in Jan, now 301

 

was 410 in 2013

Tue, 06/10/2014 - 13:42 | 4841216 LawsofPhysics
LawsofPhysics's picture

Take a look at the specialty woods.  Who gives a shit about cheap McMansion pine.

Tue, 06/10/2014 - 14:40 | 4841494 ZerOhead
ZerOhead's picture

spruce...

Tue, 06/10/2014 - 16:14 | 4841812 Jumbotron
Jumbotron's picture

YellaWood.

Pine with all the added ingredients you've always wanted.  Used to be Copper, Chromium and Arsenic.  Now it's Copper, and Bio-cides.  You know.....like fungus killer.....similar to athlete's foot cream.

Breathe in the magic when you cutting or sanding that shit.

Yum !

Tue, 06/10/2014 - 13:44 | 4841227 lamont cranston
lamont cranston's picture

Lumber as traded is a construction indicator being a softwood (pine, spruce). Good grade oak, cherry, walnut ain't cheep. 

Tue, 06/10/2014 - 16:12 | 4841814 Jumbotron
Jumbotron's picture

Peak Cheap Wood.....to coincide with Peak Cheap Energy.

Tue, 06/10/2014 - 13:30 | 4841164 orangegeek
orangegeek's picture

if you check wood crate sales or cardboard box sales, my guess is they are booming

 

have they compiled "trips to landfill sites" yet?  that would be helpful to know too.

Tue, 06/10/2014 - 13:39 | 4841203 lamont cranston
lamont cranston's picture

Like your sense of humor, but booming cardboard sales are actually a leading indicator of a robust economy or one about to recover.

That's what furniture, washing machines, spare parts, et al are shipped in...

Steel scrap was $16 CWT 4 years ago, dropped to $9.50 8-9 months ago and is now $11. My guess that's a dead cat bounce. 

Tue, 06/10/2014 - 13:52 | 4841266 orangegeek
orangegeek's picture

oops - used cardboard boxes.

 

my bad.

Tue, 06/10/2014 - 14:35 | 4841472 Handful of Dust
Handful of Dust's picture

Furniture sales down ... but gun/ammo sales brisk.

It's a crazy time we live in.

Tue, 06/10/2014 - 13:55 | 4841279 Oleander
Oleander's picture

Checked out your local Salvation Army? Seeing lots of Lazy Boy and other name brand furniture in great shape. I do not think it is people getting new furniture and dumping the old  but rather people being forced to move and get rid of a lot of good stuff. Why buy a $1000 sofa when you can get one for $65 and if the kids/dogs mess it up you can toss it.

Tue, 06/10/2014 - 14:09 | 4841336 The Most Intere...
The Most Interesting Frog in the World's picture

I often think to myself there is enough used shit in the United States to not have to buy new shit for quite a long time....

Tue, 06/10/2014 - 15:43 | 4841735 Bemused Observer
Bemused Observer's picture

You got THAT right! I can tell you from first-hand experience that there is an AMAZING amount of good, used stuff out there available dirt-cheap.

Tue, 06/10/2014 - 15:44 | 4841737 NotApplicable
NotApplicable's picture

Garage Sale Nation!

Especially once the Boomers have to deal with all of their parents stuff, and their kids have to deal with both generations' consumption.

Tue, 06/10/2014 - 13:33 | 4841173 Yen Cross
Yen Cross's picture

   I'll bet the sales of propane camping stoves, tents, sleeping bags & cots are booming though. (also corrugated cardboard for the MOAR creative types)

Tue, 06/10/2014 - 14:06 | 4841319 knukles
knukles's picture

Yes indeed, Yen, that pasta dinner does sound like a good idea!

Tue, 06/10/2014 - 14:07 | 4841322 CheapBastard
CheapBastard's picture

Long 19 cent Rahman noodles.

Tue, 06/10/2014 - 13:38 | 4841199 Zest
Zest's picture

Is this why the Art Van salespeople are getting more and more annoying?

Tue, 06/10/2014 - 13:46 | 4841237 assistedliving
assistedliving's picture

where's Greenspan when you need him? 

He'd come out w/ some esoteric, "furniture ferrules sales are up 6.0793% y/y" and we'd be off to the races once again

ARMS's baby! 

 

Tue, 06/10/2014 - 13:52 | 4841269 agstacks
agstacks's picture

Who shops for furniture or builds houses in the Spring?  All that nasty rain pouring down..  This is a one-off.  Once the warm summer arrives these numbers will improve.

87 or 87 of economists polled descirbed these numbers as noise to be ignored.

Tue, 06/10/2014 - 13:53 | 4841272 Dre4dwolf
Dre4dwolf's picture

Who the fuck wants to buy furniture?, I been tossing furniture out because we have too much haha.

In any-case furniture is dirt cheap nowadays.

Tue, 06/10/2014 - 14:37 | 4841337 CheapBastard
CheapBastard's picture

True that. The only thing cheaper then furniture is clothing. Several furniture stores have gone bankrupt around here and leave huge empty gaps in the strip mall only to be filled by those awful "world market furniture/art" auction places.

Tue, 06/10/2014 - 15:46 | 4841749 NotApplicable
NotApplicable's picture

I think that "going out of business sales" are part of the furniture store model. I don't know if I've ever seen one actually leave, though. They ususally reopen a few months later under a new name.

Tue, 06/10/2014 - 17:43 | 4842058 Blankenstein
Blankenstein's picture

 

"In any-case furniture is dirt cheap nowadays."

 

Not furniture made in the USA.

Tue, 06/10/2014 - 14:11 | 4841347 madcows
madcows's picture

It's tough to fit a couch, table and bed into a compact SUV.

Tue, 06/10/2014 - 14:53 | 4841562 Bunga Bunga
Bunga Bunga's picture

Calm down, who needs furniture these days? There is a technological innovation called App! Bullish, buy stocks, Russel P/E is still cheap.

Tue, 06/10/2014 - 15:30 | 4841683 Bemused Observer
Bemused Observer's picture

New furniture is a huge waste of money. There hasn't been decent furniture made since the early 60's, now it's all veneers over particle board (the ramen noodles of wood), and held together with staples.
To get anything semi-decent, you have to pay nosebleed prices.
I've got furniture from the 1800's that is still solid and going strong. The two new desks I bought however, have nearly disintegrated in the 5 years I've owned them. And those 2 desks cost me way more than I spent on the second-hand, high-quality stuff I picked up at estate sales.
I could sell those older pieces today for MORE than I paid (making them an actual investment) And a few of the pieces would likely end up at an antiques auction if I decided to sell them, and fetch a REAL nice price. If I could post a pic here I'd show you the third desk I bought...at a yard sale. Chinese, drop-front with interior dividers and drawers, solid walnut two inches thick in spots, completely covered with hand carvings of dragons, flowers, etc. Sold by the owners because one hinge was broken, for 40 dollars...40 frickin' dollars, it amazes me each time I sit at that desk and look it over. (The hinge wasn't broken, just separated)
40 dollars...a replacement hinge for a drop front desk would have cost me at least that much. Glad it wasn't needed after all...:-) Similar desks have sold over the past decade for many thousands of dollars. I didn't spend 40 dollars, I INVESTED it.
The 2 new desks? I paid over a hundred for each of them, couldn't GIVE them away free with a tank of gas now, and would have to PAY to have them hauled away as garbage.

Tue, 06/10/2014 - 15:50 | 4841755 NotApplicable
NotApplicable's picture

The only new furniture I ever buy is old furniture. The only exception was a water bed, long, long ago.

Tue, 06/10/2014 - 16:58 | 4841920 RMolineaux
RMolineaux's picture

Right on target.  True craftmanship in furniture manufacture, in the US, at least, is dead.  The only item that is booming is mattresses with secret pockets for small-sized assets!  (:-)

Tue, 06/10/2014 - 18:13 | 4842135 Blankenstein
Blankenstein's picture

Quality furniture was still being made in the US until the early 2000s when Mickey Holliman and Furniture Brands Inc. bought several smaller companies and moved the production to China.  Theses brands weren't cheap, but it was the kind of furniture you bought and kept until you handed it down to the next generation. 

 

http://www.msstate.edu/web/alumnus/spring.98/21aoty.htm

Tue, 06/10/2014 - 16:16 | 4841822 NEOSERF
NEOSERF's picture

Who needs a house when you can live like a turtle in your $50,000 F-10 Ford truck complete with 8 year mortgage.  Don't even need to leave the job site.

Tue, 06/10/2014 - 17:23 | 4842014 FreeNewEnergy
FreeNewEnergy's picture

In the Latino 'hood, vans are commonly known as condos.

Do NOT follow this link or you will be banned from the site!