Peripheral Visionary writes:
With numbers like these, why are homebuilders still building new homes?

These numbers will not turn around until homebuilders go bankrupt in large numbers, which for reasons I do not understand has not yet happened.
Peripheral Visionary | 05.27.08 - 10:31 am | #

Jas Jain writes:
--
Months of Supply has fallen from 11.1 to 10.6. However, for Completed Homes, the median months to sell, after completion, has increased from 7.5 to 8 months. So. We are pretty close to the worst demand situation for New Homes relative to the supply even after the supply having been cut more than 50%.

Sales are down 42%, YoY, while inventory is down only 16.9%. There are still 181K Completed Homes for sale. Peak in previous cycles was 125K.

Jas
Jas Jain | 05.27.08 - 10:36 am | #

Ken writes:
Headline from AP, credited on Yahoo as driving up the stock market:

Home Sales Post Unexpected April Increase

"Increase"? Well okay, MOM seasonally adjusted, not that it's usually measured that way, but "Unexpected"? Haven't sales gone up from March to April in, like, every year on record? I think the MSM's sense of reality may be cliff diving.
Ken | Homepage | 05.27.08 - 10:37 am | #

Lionel writes:
And why is SRS down 3 bucks?
Lionel | 05.27.08 - 10:37 am | #

Baby Jas writes:
nice summation ,Jas
spell it out... what's next?
Baby Jas | 05.27.08 - 10:37 am | #

Gary writes:
So April is dead even with the originally reported March figures.

THIS IS EXCELLENT NEWS!!! FOR REAL ESTATE!!1!
Gary | 05.27.08 - 10:38 am | #

DannyHSDad writes:
OT: HSBC's U.S. Mortgage Business May Incur More Losses, Chief Says

http://www.bloomberg.com/apps/ne...puV0& refer=asia

HSBC Holdings Plc, Europe's biggest bank by market value, may post more losses at its home loan business in the U.S., Chief Executive Officer Michael Geoghegan told shareholders in Hong Kong today.

``I believe we have further losses to make,'' he said. ``We are not convinced yet the worst is over.''

hoocoodanode
DannyHSDad | Homepage | 05.27.08 - 10:41 am | #

deuces wild writes:
MSM has no clue!

That's why we all read CR. :-)

This report was horrid and I bet some major bankruptcies are right around the corner
deuces wild | 05.27.08 - 10:41 am | #

BenB'sBailoutBonanza writes:
What's was the Poll you took last year for New home sales? or was it existing?
BenB'sBailoutBonanza | 05.27.08 - 10:45 am | #

wally writes:
It looks like the Spring Surge is over. Now it is time for the homebuilders, homesellers and banks to contemplate the long, dismal reality ahead of them.
dueces wild is right, I think: next come the BKs.
wally | 05.27.08 - 10:45 am | #

stuart writes:
Equivocate, obfuscate, procrastinate are the MOs for the MSM in describing what is unfolding in the credit markets, the real-estate markets and any other market they do not understand. The literary equivalent of diversification, a hedging strategies for dummies that know not what they're doing.
stuart | 05.27.08 - 10:47 am | #

k harris writes:
Note that there was a 42k (annualized) downward revision to sales from November through March, with at least some downward adjustment to every month in that period. The sales price increase in April is odd, but there were downward adjustments to median prices for every other month so far in 2008.

Ken,

Actually, new home sales are usually measured that way. That's how Commerce reports the data. Prior to seasonal adjustment, home sales have fallen from March to April in most years. After seasonal adjustment, you'd expect more increases than declines, because it is a rising series, but only a small margin.
k harris | 05.27.08 - 10:47 am | #

Name writes:
What recession?
Name | 05.27.08 - 10:49 am | #

bsneath writes:
Why would someone buy a stripped-down, out in the boonies new home when the inventory, location and pricing of existing homes is comparitively better? I think we will see a lot of creative destruction (aka bankruptcies) in the near future. Just speculation, but I suspect many builders no longer can compete on a pricing basis due to the rising costs of energy, commodities and other components that make up the cost of a new home.
bsneath | 05.27.08 - 10:52 am | #

Mike in AZ writes:
So new home sales are down from March, but the seasonally adjusted sales are up from a downwardly revised March number. Let's see what Yahoo! finance is telling the masses:

Home Sales Post Unexpected April Increase

Stocks Advance After Surprise Gain in Home Sales
Mike in AZ | 05.27.08 - 10:53 am | #

Richard writes:
national stats have some use by local stats are what impacts people more directly. in a NYC suburb in NJ prices are essentially flat for the entry to mid level markets for the past 18 months. no one really sweating around here.
Richard | 05.27.08 - 10:54 am | #

w writes:
OT - from Naked Capitalism

Regarding China's foreign currency reserves.

"We have reached what I believe is the end stage of this trap in which the monetary system is forced to adjust through appreciation and inflation. The problem is that in such a case there is a huge risk that hot money inflows destabilize the adjustment process, and this seems to be exactly what is happening. Instead of reducing foreign exchange inflows, the appreciation of the RMB is causing massive hot money inflows (which is not at all surprising, but it has been made much worse by China’s bad luck of having to adjust in the middle of the sub-prime crisis) and so the adjustment must be much more dramatic and much more painful. No matter how quickly China tries to reduce monetary expansion by appreciating the currency, in other words, monetary expansion grows even faster"

http://www.nakedcapitalism.com/2...se- foreign.html

reposted from last thread.
w | 05.27.08 - 10:56 am | #

Anon writes:
Richard...

sell before you get the stiff richard.
Anon | 05.27.08 - 10:56 am | #

MiTurn writes:
Roller Coasters make me sick. So does this ride. . .
MiTurn | 05.27.08 - 10:59 am | #

Mike in AZ writes:
in a NYC suburb in NJ prices are essentially flat for the entry to mid level markets for the past 18 months. no one really sweating around here.

Richard,
Looks like Newark is down 13+% since spring 06.
Mike in AZ | 05.27.08 - 11:00 am | #

NoVa writes:
This weekend traffic was light. We were in the Old Town area of Alexandria, VA and if you subtracted the bikers in town an Europeans it would have been dead. No, this is not a primary tourist destination.

I am surprised I have not read anything about the stimulus checks. This is going to prop up the economy? People are getting theirs and I see no propping, buying, or driving. Its like Bush had a party and no one came.

If you can't afford to shop or drive your car then who is going to buy a house? Especially if you have to put something down? We looked briefly and it is 20% down in the No. VA. area. For a starter that is $80,000 plus all the other stuff.
NoVa | 05.27.08 - 11:00 am | #

Jas Jain writes:
--
Latest Radar Logic Data: Areas With the Worst Current Price Trends

With prices (PPSF) making new lows almost on a daily basis (covers 28 prior days of transactions) and declining at 2-5% a month rate, in order.

Phoenix, AZ
Miami, FL
Detroit, MI
New York, NY
Sacramento, CA
San Jose, CA
Charlotte, NC
Los Angeles, CA
San Fran, CA
Tampa, FL
Washington, DC

Jas
Jas Jain | 05.27.08 - 11:03 am | #

Greg writes:
The supposed "increase" of 3.3% in month-over-month sales – much better than the survey estimate of a decrease of (1)% – is entirely the result of two factors: (1) the actual (not seasonally adjusted) number of sales for March was revised downward from 51K to 49K and (2) the seasonal adjustment factors for 2006, 2007 and 2008 were all changed this month. If not for those two changes, month-over-month seasonally adjusted sales would have declined by (2.0)% or more – much WORSE than the expectation.

Here's the effect of the change in seasonal adjustment factor. Actual sales in March 2007 were 108K and in April 2007 were 100K. If you look at last month's press release, you will see that those actual sales translated to 1126K seasonally adjusted for March 2007 and 1097K seasonally adjusted for April 2007 - a decline of (2.6)% month-over-month. Now look at this month's press release. The 2007 figures have been revised. The actual sales for March and April are unchanged, but the seasonally adjusted sales have been revised to 1116K for March and 1123K sales for April - an increase of 0.6%. As a result solely of the change in seasonal adjustment factors - not any change in actual sales - a (2.6)% decrease has been converted into a 0.6% increase.

Now look at this year's figures. Last month’s press release showed actual sales in March of 51K. This month’s press release shows actual sales in April of 47K. In percentage terms, that is almost exactly the same as last year’s March to April decline from 108K to 100K. If last year’s factors had been used, this would have translated to a decline month-over-month in seasonally adjusted sales of about (2.6)%. However, actual March sales were revised downward this month to 49K, and as noted, the seasonal adjustment factors were also changed, leading to the supposed 3.3% increase.

The stock market is up today because of the purportedly encouraging sales numbers. This seems to have become a recurring phenomenon. Every month, the reported number appears to come out better than expected, and the stock market rallies on the news. Unnoticed are the revisions that show that the previous month’s figures were overly optimistic.

Likewise, based on the last several months’ experience, we can expect that April actual sales will be revised downward next month to something like 45K, which will translate to a flattish month-over-month seasonally adjusted figure. But by that time, the market will have moved on to be encouraged by next month’s overstated May results.
Greg | 05.27.08 - 11:04 am | #

Datahead writes:
So much to say about these numbers, but I will keep it brief. It would not surprise me if April's new home sales numbers were revised downward next month. Over the past 12 months, new home sales have been revised downward 8 times, while twice they were revised upward, and twice they were essentially unchanged. On average, the revision is about -2.5%.

Mortgage rates were much higher than current rates from 1979 through 1982 when inventory was last above 10 months supply. There will be no large interest rate decline to improve affordability and help sell houses this time around. So the dramatic drops in the inventory during prior cycles are unlikely to repeat.
Datahead | 05.27.08 - 11:06 am | #

Bob_in_MA writes:
Richard, that's the situation here in Western Mass too, actually prices have been flat for close to three years.

But as an experiment I went to Zillow and used there average current price for our county and the one from ten years ago. If I take the figure from ten years ago and increase by 3%/year for the inflation rate, the number I come up with is 30% below current prices. Ouch.

At this rate, nominal prices would need to be flat about another nine years to let inflation make up the difference. For the Commonwealth of Mass as a whole, they would need to be flat for 18 more years. Double ouch.
Bob_in_MA | 05.27.08 - 11:19 am | #

safe_as_apartments writes:
Bob_in_MA: here in the greater Boston area, I'm seeing prices in the 2003 range. Prices are definitely 10-20% off the peak in Eastern MA.
safe_as_apartments | 05.27.08 - 11:30 am | #

Jas Jain writes:
--
Areas With POSITIVE Price Trends During 2008Q1

As per Radar Logic PPSF series, in order:

St. Louis, MO
Cleveland, OH
Chicago, IL
Atlanta, GA
Milwaukee, WI
Denver, CO
Philadelphia, PA

Pretty much all are non-bubble areas except for Chicago that had a bounce off a huge decline during 2007Q3-Q4.

Jas
Jas Jain | 05.27.08 - 11:30 am | #

Don writes:
To echo Ken's comment about MSM's sense of reality:

Consumer confidence hits 16-year low in May/May 27, 2008

NEW YORK (Reuters) - Consumer confidence plunged unexpectedly to its lowest in 16 years in May as rising gasoline costs and falling home prices made Americans nervous about the future, a survey released on Tuesday showed.

What planet do you have to be from to call this drop in confidence "unexpected?"
Don | 05.27.08 - 11:40 am | #

a different chris writes:
>New home sales in April were the lowest April since 1991.

You didn't publish the actual April 91 figures.

If you really want to get a taste of our "economy", this is one number that I think really deserves to be divided by the population - how likely is a given individual to be considering a new home.

We had a pop of 252 million in 1991, about 306 million now. Ugh.
a different chris | 05.27.08 - 11:59 am | #

Gamma writes:
Jas-

Chicago's pain is coming over the next 12 months. HUGE supply of condo's coming to downtowna and sales are non-existent.
Gamma | 05.27.08 - 12:06 pm | #

Sebastian writes:
Datahead said: "...So the dramatic drops in the inventory during prior cycles are unlikely to repeat."

San Diego is one of the "ringleaders" of the housing bubble, but look at inventories.

http://www.housingtracker.net/as...sbad-SanMarcos/

They peaked and are actually looking like they might be *declining*.

Sacramento was another hard-hit area of California, but inventories are down there, too.

http://www.housingtracker.net/as...cade-Roseville/

Those inventory declines were going on as lending rules were tightening-up, during the credit "crunch," and while the GSE's had instituted heavier restrictions on loans being made in areas with falling prices.

What's likely to happen as these conditions continue to ease?


Sebastian
Sebastian | 05.27.08 - 12:12 pm | #

mal writes:
San Diego is one of the "ringleaders" of the housing bubble, but look at inventories.

http://www.housingtracker.net/as...sbad-SanMarcos/

They peaked and are actually looking like they might be *declining*.

Or maybe some houses just were picked completely clean for copper piping and so there are less houses to sell. :-)
mal | 05.27.08 - 12:15 pm | #

Jas Jain writes:
------------------------
http://www.nytimes.com/2008/05/2...ml? ref=business

May 27, 2008
Contractors Are Kept Busy Maintaining Abandoned Homes
By VIKAS BAJAJ
JACKSONVILLE, Fla. — The house on East 24th Street was the worst of the six that David Law and Trey McCallister worked on the other day here. The front door had been kicked in so many times that the dead bolt was exposed and bent. Trash littered the front and back yards. A copper pipe was gone.
“Somebody has been trying to destroy this place,” said Mr. McCallister, eyeing the door.
But the two men have seen far worse as they go from one deserted house to another in northern Florida, where the foreclosure crisis has struck particularly hard.

Mortgage companies hire contractors like these men to inspect and maintain houses that once-proud owners can no longer afford and no one else wants. These days, business is brisk.

These contractors and thousands like them see first hand the detritus of the subprime era: peeling paint, gutted interiors, family dogs left behind to starve, overgrown lawns infested with snakes.

...
Jas Jain | 05.27.08 - 12:32 pm | #

hiker90 writes:
Sebastian,

I would expect prices to continue to decline in spite of minimal inventory changes due to the price/income ratio still being so high at 8.5. The P/I ratio has a long ways to go before reaching historical San Diego standards.

http://www.housingtracker.net/af...ornia/san- diego

Best,
hiker90 | 05.27.08 - 12:36 pm | #

Jas Jain writes:
--
"What's likely to happen as these conditions continue to ease?"

Sebastian,

A solid bottom in the home prices and a violent rally in the Scam Market led by Fraudentials.

Jas
Jas Jain | 05.27.08 - 12:36 pm | #

mp writes:
Here's an example of why I don't read Forbes:

Forbes, NY - 38 minutes ago
AP 05.27.08, 11:55 AM ET Shares of most homebuilders climbed Tuesday as data showed new home sales posted unexpected growth in April and Standard Pacific ...
mp | 05.27.08 - 12:48 pm | #

Sebastian writes:
mal said: "Or maybe some houses just were picked completely clean for copper piping and so there are less houses to sell. :-)"

You mean since they no longer have plumbing they're not considered to be houses anymore and are removed from the list? I like it.:)

Or maybe they're "discouraged" houses, which have been on the market so long that they're no longer considered part of the inventory?:)))


Sebastian
Sebastian | 05.27.08 - 1:08 pm | #

sbarrkum writes:
Mike in AZ | 05.27.08 - 11:00 am | # Looks like Newark is down 13+% since spring 06.

You have to be a brave soul to live in Newark as a place to commute to NYC.
It the new South Bronx. The South bronx is actually upscale now. Brownstones go for 500K and two blocks away are the projects. !!

That said, there was hope for Newark with the new Mayor Cory Booker. I just think the timing to the economy was back. i.e. If the economy held up, and with marked decrease in crime in Newark, NYC would have expanded into Newark. Unlikely now though.
sbarrkum | Homepage | 05.27.08 - 1:13 pm | #

invest public mutual writes:
Pretty depressing stats huh..
I've been watching bloomberg daily..and with the oil price constant increase..stock markets are falling even more

However, now would be a good time for those intending to invest to start saving money and start buying properties soon once prices start to turn around..beat the crowd and ride the wave up.
invest public mutual | Homepage | 05.27.08 - 1:32 pm | #

xtophr writes:
I have been thinking lately about what it will take before housing prices stop falling, and well, I'm stumped. I just don't see anything on the horizon that will turn the tide:

-Boomers all have houses (or two)
-Gen X-ers have houses, or don't want one
-Immigrants have houses, or prefer renting, because they have no plans to stay.


This last point is the most interesting: Globalization has made relocation so cheap that immigrants no longer have to make a lifetime commitment to life in the US.

In my field (technology) I work with many skilled workers here on H1-B visas. Maybe 1 in 5 workers plans to stay here permanently: Most of them are here to amass a small fortune and then return to their home country when their visa expires.

Without immigration, the US would have negative population growth, and presumably, declining demand for housing.

Let's assume the market is returning to long-term rent/mortgage equilibrium. What I wonder is whether new immigrants plan to put down roots long enough to make the home-buying equation pay off?

Anecdotally, mobility as an option on future income streams (being able to go where the work is) seems worth more to my immigrant co-workers than whatever benefits (real or perceived) go along with owning a home.
xtophr | 05.27.08 - 1:49 pm | #

Gamma writes:
Xtopher-

Bingo. "mobility as an option on future income streams."

as unemployment continues to climb, people will come to wish they owned that option.
Gamma | 05.27.08 - 2:16 pm | #

Guy writes:
Shocking.










Not.
Guy | 05.27.08 - 3:01 pm | #

Name writes:
"These contractors and thousands like them see first hand the detritus of the subprime era: peeling paint, gutted interiors, family dogs left behind to starve, overgrown lawns infested with snakes. " -article quoted by JJain

The sales boom began drying up about 2 years ago, the financing boom about 1 year ago. If the paint is peeling now, it was peeling when they bought.

Also, when did the sudden snake infestations start? Has Saint Patrick been foreclosed out of his spec home?

Another worthless hyperbolic vignette.
Name | 05.27.08 - 3:36 pm | #

NTW writes:
Annecdotal Evidence re: Supply

I am currently visiting a small town two hrs E of Seattle. Have mentioned possibly buying house here to about ten people. Have been offered three houses none of which were listed w/realtor.
NTW | 05.27.08 - 3:39 pm | #

fatbear writes:
Before today's Revision of March to 509K SAAR, the announced rate (a month ago) for March was - guess it - 526K SAAR - hmmm - isn't that the same number announced for April?

And that is without taking into account Greg's note way-above about the change in the SAAR formula.

Are we willing to make book on the next 4 months' numbers, first as announced, then as revised? Who's willing to take the short side @ 450K SAAR for the REV Aug figures (last to come out in Oct before the election)?
fatbear | 05.27.08 - 3:39 pm | #

Datahead writes:
Sebastian,

I love your optimism, but I don't share it. Although the inventory seems to have stabilized around 19,000 plus, I believe the number of sales had fallen until about November of last year, so the months supply has actually grown. I don't have the hard numbers handy, but that's what I can surmise from looking at San Diego's pair counts in Case-Shiller.

Also, I believe there is a shadow inventory of lots of possible home sellers that are waiting for the market to improve.

In my mind, Sacramento is actually worse off because their inventory compares to significantly fewer homes sold. At least in San Diego there is some demand, in Sacramento there is such oversupply, it will recover more slowly than the San Diego market.
Datahead | 05.27.08 - 5:45 pm | #

karen writes:
Sebastian,

Wow the median price in the Sacramento area is still over $300k!! That's pretty incredible since the Sac Bee just reported that the median income was just over $60k. Are we still getting a lot of Bay Area people buying homes here?

It's just incredible to me that the median hit over $400k in 2006. I remember in 2003 when some neighbors bought a nice 2 story house for $250k and I thought "Wow, that's a lot of money for a middle class house."
karen | 05.27.08 - 5:51 pm | #

HK_Vol writes:
Sacramento isn't that expensive anymore. In fact, it is no more expensive than Nashville, TN. While it could overshoot obviously, Sacramento seems to be one of the few cities that has reasonably adjusted....
Date Inv. 25th Pct.(Median) 75th Pct.
05/21/08 10,021 $167,500 $240,000 $349,999
05/21/06 9,973 $324,900 $395,000 $499,990

http://www.housingtracker.net/ol...nia/Sacramento/
HK_Vol | 05.27.08 - 10:56 pm | #

eh writes:
As CR's own report shows, without the downward revision of March sales there would have been no increase to report today.
eh | 05.27.08 - 11:31 pm | #