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New Home Sales Drop To Lowest Since March As Northeast Craters; Biggest Supply Since October 2011

Tyler Durden's picture




 

Following last week's housing starts data, everyone was expecting a new home sales number that was even better than the consensus 430K. Instead, the July print of 412K was not only the 5th miss in the last 6 prints, but also the lowest number since March's 403K. The biggest drop took place in the Northeast where the sequential plunge was some 31% to just 18K new houses, and a whopping 44% from a year ago. There were declines in the Midwest which dropped 8.8% and in the West, which dropped 15.2%, while the only increase was recorded in the South which rose 8.1%. In fact, of all regions, only the South posted an increase from July 2013, surging by 33%, with new home sales in all other regions dropping.

 

Other notable data: the median home price dropped by 3.7%, the biggest drop since May 2013, and down to February 2014 levels:

 

Finally, and perhaps most troubling, the months supply of new homes rose to 6.0, the highest since September 2011, as a result of 121K homes under construction the most in years, while 37K new homes have not even been started: also the highest number in years as builders seem to have frontrun the "recovery" once again. All this suggests that there has been an inflection point in the supply which can not be absorbed by the market, which also means median prices are likely to drop in the coming months.

 

All in all, just the right mix of bad news to send the S&P 500 to 2,000.

 

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Mon, 08/25/2014 - 10:21 | 5140361 SHEEPFUKKER
SHEEPFUKKER's picture

Oh fukk, winter is coming. 

Mon, 08/25/2014 - 10:25 | 5140375 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Shhhhh ......, don't let on this happens every year at the same time.

Mon, 08/25/2014 - 10:29 | 5140392 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Houses are obsolete. Enjoy your 200 square foot apartment cells serfs.

Mon, 08/25/2014 - 10:35 | 5140415 john39
john39's picture

the owners would prefer that you use their term for our housing... "pens"....

Mon, 08/25/2014 - 10:47 | 5140489 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

A stall works too, like for a tax donkey.

Mon, 08/25/2014 - 10:51 | 5140508 toady
toady's picture

200? Make that 60! And that's for two!

Mon, 08/25/2014 - 11:06 | 5140582 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Enjoy your 200 square foot apartment cells serfs.

Soon, you can squat your abandoned, burned out 2000 sq ft house that is less than a decade old when owners are evicted by their bankster overlords.

Mon, 08/25/2014 - 11:57 | 5140770 BandGap
BandGap's picture

Odd story - the woman who cuts my hair claims that she and her boyfriend could not rent locally (at a fairly nice apartement complex north of me) because THEY MADE TOO MUCH MONEY. Housing authorities are offering incentives to apartment owners such that a percentage of low income people get housing at a deep discount. And I do mean deep (~50%).

In a nutshell, the givenrment is picking up the tab for welfare recipients to live in upgraded housing. There is ZER0 incentive to raise your lot in life because the F3ds are lowering the bar.

Mon, 08/25/2014 - 10:57 | 5140540 j0nx
j0nx's picture

Where in the northeast? Certainly not in the NoVa area. There aint shit out there for sale and what is is still 25-50% overpriced. Unless you want to live with the illegals and section 8 losers that is.

Mon, 08/25/2014 - 10:22 | 5140365 yogibear
yogibear's picture

Super-duper bullish, buy stocks.

Mon, 08/25/2014 - 10:24 | 5140369 RattNRoll
RattNRoll's picture

Shit where I live, it's new homes, new corvettes, new suv's.....what could go wrong?

Mon, 08/25/2014 - 10:26 | 5140372 Terminus C
Terminus C's picture

Craters?

Sales are flat from 2008 (low and not recovered).

Median Sales price on a rising trendline.

New home supply on a declining trend line (because no one is building most likely).

 

Mon, 08/25/2014 - 10:28 | 5140382 Dubaibanker
Dubaibanker's picture

The main reason people are shooting each other, home sales are plummeting and car sales are stagnant and declining over the last decade is here:

Nearly One Quarter of Millennials Under Extreme Financial Stress TD Bank survey finds most millennials wish they were better prepared for life events.   It is estimated that there are anywhere between 40m to 60m people who are between the age of 24 to 34 in the US and increasingly most either dont have jobs or they are operating in the circumstance of low income and high rental expense situation.

 

But hey, since when did logic matter?! eh?

Mon, 08/25/2014 - 10:34 | 5140410 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

"Nearly One Quarter of Millennials Under Extreme Financial Stress"

The other three quarters are either living with the parents, getting supplemental income from them, or nursing off the government's tits. Ah, the 'Merican Dream. Rally on fuckers.

Mon, 08/25/2014 - 11:43 | 5140729 Lux Fiat
Lux Fiat's picture

Wonder how much of this is due to retirees fleeing higher tax regions for low tax ones?  Milder winters don't hurt either.

Mon, 08/25/2014 - 10:26 | 5140384 the not so migh...
the not so mighty maximiza's picture

i thought builder confidence was at an all time high

Mon, 08/25/2014 - 10:27 | 5140388 roadhazard
roadhazard's picture

My local news said it was the best yet.

Mon, 08/25/2014 - 10:31 | 5140400 loregnum
loregnum's picture

Rained a lot in the northeast during July so clearly that is the reason.

Mon, 08/25/2014 - 11:05 | 5140578 F.A. Hayek
F.A. Hayek's picture

Farmers almanac said it would be a rough winter. This is just the market pricing in that news.

Mon, 08/25/2014 - 10:33 | 5140408 F.A. Hayek
F.A. Hayek's picture

10-30 years of voluntary servitude, taxes, maintenance, and no more free time. What's not to like?

Mon, 08/25/2014 - 10:39 | 5140434 10mm
10mm's picture

Couldn't have said it better F.A.

Mon, 08/25/2014 - 10:38 | 5140414 clade7
clade7's picture

Beautiful waterfront In West Point Liberia!  Gated Community!  Colorful Nightlife!  Come and enjoy the fabulous beaches and open air bungalos!

World reknown cuisine!  Chef ButtNaked at Hannibal's Cabannibal frys up a fabulous long pig, also ask for the assblood soufle'!  Its to die for!

Mon, 08/25/2014 - 10:39 | 5140435 RattNRoll
RattNRoll's picture

Dont forget the bbq'd monkey ribs.

Mon, 08/25/2014 - 10:50 | 5140507 Global Hunter
Global Hunter's picture

+1 for the buttnaked cannibal reference

Mon, 08/25/2014 - 10:37 | 5140418 JustObserving
JustObserving's picture

Can we get Kevin Henry to buy a few hundred thousand homes to enhance this recovery? Besides, New York City real estate is such a bargain now.

Mon, 08/25/2014 - 10:37 | 5140424 replaceme
replaceme's picture

It was the best of times, it was the worst of times.

Mon, 08/25/2014 - 10:40 | 5140446 IronShield
IronShield's picture

This is a shocking development.  I'm going to call my realtor right away to get the truth.

Mon, 08/25/2014 - 11:21 | 5140643 hesk
hesk's picture

It's a great time to buy!! Get in before rates rise!!! -Your Realtor.

Mon, 08/25/2014 - 13:54 | 5141236 Kirk2NCC1701
Kirk2NCC1701's picture

I'm all out of Detroit rental properties, so I don't give a shit anymore. The BS, fraud and lies from the Stats people doesn't hold a candle against the Detroit RE market and its shenanigans.

Wish there were a BTFD moment here in the Pacific NW.

Mon, 08/25/2014 - 10:51 | 5140512 Downtoolong
Downtoolong's picture

Lenny, we need another weather spin for this.

Got it! Let's see, how about, "the weather was so darned nice everyone went to the beach instead of building homes."

Brilliant!    

Mon, 08/25/2014 - 12:33 | 5140910 disabledvet
disabledvet's picture

Ummmm...."weathering is a process that explains many, many, many things"?

Or maybe..."how about a little weather with that leather cowboy!"

Perhaps..."weather or not...you're it sucker!"?

Mon, 08/25/2014 - 10:54 | 5140526 AdvancingTime
AdvancingTime's picture

When it comes to real estate low interest rates at some point becomes a double edge sword, that effects both the value by making it easier to purchase thus driving up prices, and at the same time allowing more building to take place and increasing the supply. Often we reach or exceed demand, this eventually has a dampening effect on rents and people stop buying it as an "investment".

Prices must rise and real estate appreciate more then the natural depreciation from the wear and tear from age or the main driver for owning it vanishes. Oversupply is the bane of real estate and crushes the value of this hard and expensive to maintain commodity. Currently we are in uncharted waters, more on this subject in the article below.

http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...

Mon, 08/25/2014 - 11:12 | 5140614 Son of Loki
Son of Loki's picture

Lots of houses for sale...just look at almost any area on Zillow or any of these sites. However, i also notice 99.9% are overpriced imo. New houses are built like crap....cheap wood and paper then walls, crappy cement floors filled pockmarks, super cheap untreated wood fences that will rot/falldown in 5 years.....just watch one begin built.

 

It'll amaze you even if you don't know much about construction. If you do know some, watching them build these boxes will give you the goosebumps.

Mon, 08/25/2014 - 12:06 | 5140797 Winston Churchill
Winston Churchill's picture

Not just New York, or low end houses.

Seems the quality usually goes down as the price goes up.

A certain Canadien diva I know, had to replace all her windows and doors,

five years after her mansion was built.Painters in Florida seem unaware those things have

tops ,and bottoms.Whocouldhadnode.

Mon, 08/25/2014 - 11:12 | 5140616 starman
starman's picture

Shouldn't Amazon be selling houses and have drones deliver it? 

Mon, 08/25/2014 - 13:15 | 5141069 huggy_in_london
huggy_in_london's picture

Yeah the drones deliver YOU!

Mon, 08/25/2014 - 11:19 | 5140633 hesk
hesk's picture

Great, can't wait to pitch my tent in the local "Obama-ville"

Mon, 08/25/2014 - 11:51 | 5140747 Tsar Pointless
Tsar Pointless's picture

EconoDay sees this report as - oh, let's say - bullish.

Highlights
Upward revisions offset a lower-than-expected 412,000 annual sales rate for new home sales in July with the two prior months revised higher by a total of 28,000. July's gain is centered entirely in the South which rose 8.1 percent in the month. The South is by far the largest region for new home sales, outdistancing all other regions combined.

Lack of new homes on the market has been constraining sales but perhaps less so now. Supply on the market rose to 205,000 vs 197,000 in June, pulling up the monthly supply to 6.0 months at the current sales rate vs 5.6 in June.

High prices have also been constraining sales but, again here too, perhaps no more. The median price fell 3.7 percent in the month to $269,800. Year-on-year, the median price is up only 2.9 percent which is well below the year-on-year sales gain of 12.3 percent.

The Dow is moving to opening highs following today's report, a key report that, despite the soft headline and concentrated gain in the South, adds to the building evidence of renewed vigor in the housing sector.

Mon, 08/25/2014 - 12:06 | 5140803 IronShield
IronShield's picture

As I've oft stated, until there is a 90% peak to trough correction, there will be no relief for the FIRE "industry". In essence, stick a fork in it bitchez, it is over.

If you don't have a valued skill set, I suggest you start working on that right now, lest I see your sorry @ss on the street corner with that foldable cardboard sign (in case the popo come).

Mon, 08/25/2014 - 12:33 | 5140911 walküre
walküre's picture

Are they counting trailer park homes in this? How are the big producers of mobiles doing?

Cost of building is sky high as material prices have gone parabolic. The group of potential buyers for new builds is getting ever smaller as the cost of building goes up. Not to mention the whole nasty mortgage business where banks think it 10x over before accepting a building as collateral.

Mon, 08/25/2014 - 12:42 | 5140943 oklaboy
oklaboy's picture

and how is that 5th summer of recovery doing?

Mon, 08/25/2014 - 14:17 | 5141322 novictim
novictim's picture

Homes at ridiculous prices, mortgage prices sometimes 5-10 times prevailing yearly incomes, are NOT the hallmark of a healthy economy.

Let me say that again: Home prices that are too high are a sign of a sick economy, not a healthy economy. 

"Buy now because the interest rates are just so awesome!!" -Real estate babble heard on every block across the West Coast.

Sure, you can shoe-horn your way into a $700k home on your $100k family income. But when interest rates go up from 4% to 7% to 9% then you are toast!  That home is going to lose half its value overnight but you will still be stuck in that crap-shack while your realtor can just skip off with his 3-6% commission with never a glance back at the ruin left behind.  

Oh, but don't forget!  Real Estate prices are going up Fo-Eh-Vah!

Now is a "GREAAAATTTTT TIME TO BUY!"

Mon, 08/25/2014 - 14:30 | 5141359 Colonel Klink
Colonel Klink's picture

I'm not buying jack shit until the next real estate debacle and prices get a lot closer to reality.

Fuck the banks, fuck the builders.

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