Housing by the Numbers

What a difference a year makes:

Housing by the numbers

Housing Stat Year Over Year Change
Builders’ sentiment -52.2%
New-home sales -21.6%
Purchase-mortgage applications -20.9%
Building permits -20.8%
Housing starts -13.3%
Existing-home sales -11.2%
Existing-home inventories +39.9%
New-home inventories +22.4%



This is one of those (rare) occasions where I will simply shut up and let the data speak for itself . . .


Hat tip: Nouriel Roubini, RGE


Existing-home sales plunge to a two-year low
Inventories of unsold homes rise to 13-year high
Rex Nutting
MarketWatch, 2:12 PM ET Aug 23, 2006

Eight Market Spins About Housing by Perma-Bull Spin-Doctors
Nouriel Roubini
RGE, Aug 26, 2006

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What's been said:

Discussions found on the web:
  1. PigInZen commented on Aug 31

    So does anyone think we’ll be able to sell our house at a decent price? We’re already looking at knocking 5-8% off the $/sq. ft. prices of March even before we list it. Obviously the local market dictates but we’re in fly-over country.

  2. Barry Ritholtz commented on Aug 31

    Its likely easier to sell a house in an area where prices didn’t go crazy . . .

  3. Lyon commented on Aug 31

    With long term mortgage rates having fallen about .50% recently, your chances are better than they were. Realtor friends of mine suggest doing a competitive market analysis of similar homes in your area and then pricing your house 5-10% lower then competitors off the bat.

    This way-

    1) purchasers think they might be getting a deal.
    2) You will acquire way more foot traffic.
    3) You won’t have to reduce your price quickly and look desperate.

    Good luck.

  4. Robert Coté commented on Aug 31

    BR, I respectfully disagree with your reply. The credit bubble is nationwide. The areas where housing went up in price were a result of it. Why assume that just because prices didn’t rise as much in flyover country that they didn’t particpate in the same excesses? Unless the area in question doesn’t have a WaMu ($30 billion in unquafied loans annouced yesterday) or BofA and they’ve never heard of DiTech or Countrywide or Golden West or Option One then they are in a bubble zone.

    As to the original question about “decent price.” The price has no memory or morality. My Dec 590 gold is just a price, some would call it indecent, others fair. Unfortunately for the questioner 5-8% off the spring prices is chasing the market down, a limit order that will never get filled. The houses that are selling now are only the very best examples, keeping medians high. Most places track are at/below 2005 numbers and have had any quality premium erased. Wishing Price is no longer the Selling Price. Factor in the psychology and carrying costs and time decay; 5-8% is not enough in even the markets that didn’t see massive run ups.

  5. sh commented on Aug 31

    Dear BR, isn’t it time to begin discussion on the seeming contradiction between so resilient numbers from consumption related area and all these dismal numbers from housing market? Hope to hear your thought on this divergence.


    BR: Why do you people keep trying to give me more homework? Take what you get and be happy!

  6. Barry commented on Aug 31

    Robert, I respectfully disagree with your reply to BR. Prices here in SC have not yet fallen. Most recent read had prices UP 9% YOY. We still have a strong influx of yankees and the supply of housing is still not in excess in the most desireable areas. Prices are no longer rapidly escalating, but still holding. Incidentally, prices in Charleston went up double digit for many years. Prices could now fall 30% and home owners of 3 years plus are still well in the black (not to mention long time home owners being way up).

    Barry H.

  7. Bob_in_MA commented on Aug 31

    I agree. Housing prices might not have soared in the middle of the country, but prices did go up substantially even as incomes fell in many places.

    Obviously prices are likely to fall the most in the over-heated markets. But they’ve been giving out plenty of subprime and exotic mortgages in the Midwest.

    The WaMu issue Robert alludes to was mentioned in the WSJ yesterday.

    For a year and half, they were qualifying option ARM borrowers on teaser rates. It was a “mistake.”

    That article also mentions, “investment banks have sending mortgages back to the lenders if they find slip-ups, such as inaccurate paperwork or poor performance. The most common trigger is a so-called early payment default, where the mortgage holder has missed the deadline for the first payment.”

    So mortgage lenders are going to be unable to unload ever more questionable loans.

    There was another WSJ article the day before about how hedge funds are forcing companies that miss SEC filings to redeem bonds at face value.

    Assuming the WaMu loans mentioned above were securitized, could the holders of those bonds demand redemption?

    I’m betting big that these mortgage banks get really whacked.

  8. Robert Coté commented on Aug 31

    Barry H,
    Your comments can be repeated with simple substitution Californiaequity locusts for Yankee, etc. Charelston, where do you think that money came from? Yankees extracting equity and doubling down their bet on real estate aapprecition. In effect tying the future of SC to MA. I gotta go, sorry, I can’t talk more. Making money awaits.

  9. silver_surfer commented on Aug 31

    To Barry H:

    What is important at this time is the volume of sales, because the sellers are still in denial.

    If this housing decline accelerates in tandem with the decline of the dollar, then nominal house price declines only tell half the story.

    If bucky loses 25% and your house loses 25%, well then your real equity has been cut in half.

  10. Michael C. commented on Aug 31

    >>>With long term mortgage rates having fallen about .50% recently, your chances are better than they were. <<< I disagree here. The reason is that mortgage applications, latest data is from the week ended Aug 25, have fallen to the lowest level since Nov 2003. This is despite the slight decrease in mortgate rates. From this data, one can conclude that the increasing inventory and high energy prices are more than offsetting any decrease in mortgage rates.

  11. Lyon commented on Aug 31


    Simple math dictates odds are increased due to lower cost
    of ownership.

  12. Chief Tomahawk commented on Aug 31

    I’m scratching my head…

    How could BR’s data not be a market mover down??? I guess it’s just going to take some time for awareness to reach critical mass… then the stopper gets yanked out from the bottom of the tub…

  13. lauteus commented on Aug 31

    With the media recently talking much about the decline in housing sales and increasing negative pressure on prices, the decrease of mortgage rates will have less of an impact on moving inventory.

    I am waiting to buy in PHX and since the “cat is out of the bag” on prices (due mostly to the media), I don’t think many will buy until we see a substantial price cut (…falling dagger scenario). Even if you could get 0%, if the price is expected to (and does) drop you still end up red. Patience and common sense; it’s elementary…

  14. JoshK commented on Aug 31

    Well, if you are selling, offer some weeteners. That seems to be what builders are doing. Maybe home insurance, security system, new appliances or something like that.

  15. Barry Ritholtz commented on Aug 31

    BTW, I wouldn’t be surprised to see a bounce in the homebuilders.

    There has been so much written about them, down 50% from their peak. TOL for example returned back to its 2004 break out level, and its 200 day moving average . . .

    Thats for nimble traders only . . .

  16. Michael C. commented on Aug 31


    Simple math dictates odds are increased due to lower cost
    of ownership.<<< Let me give an example just to make a point. You are the only home selling on your block. Versus. You and now a plethora of your block has put their houses for sale but mortgage rates drop .50%. Which is better? Yes, mortgage rates are a huge factor of housing supply/demand. But so is inventory, and that especially has to be considered here given the ever increasing housing inventory.

  17. Lyon commented on Aug 31


    All I said were the odds are better. Period.

    I agree the market is in serious trouble.

  18. Alaskan Pete commented on Aug 31

    Those who argue that decreased mortgage rates will stimulate buying, explain something to me:

    Who will these buyers be? We are at record homeownership levels around 70%. This is much higher than the historical rate of mid 60s. So, we do have a segment of population financially able to buy a home…but the vast, vast majority of these folks already own a home. Presumably, for them to buy another home and take advantage of the lower rates, they would likely attempt to sell their current home.

    Bottom line is, this does not increase net buyers since the buyer is also a seller, and with inventory rising sharply and everyone who can afford to be in housing is already in….only one direction for prices to go.

    I’d be happy to hear an argument of how we will actually reach 80% homeowner rates when incomes in real terms are flat to down over the mid to long term and housing as a % of income (i.e. affordability) is at multi-decade lows. Go ahead and argue population growth while you’re at it, given that a large portion of the growth is from illegals making $10/hr and won’t be buying a $300k home anytime soon.

    BR: Have fun with that HB bounce, I’m not touching that one. The $DJUSHB is forming a nasty looking bear flag/pennant on the weekly. I lightened up on my LEN short this a.m. but still have a half-sized position on. My stops are sitting at a 2R profit, so I’m more than willing to let it ride until the pattern completes or negates on the weekly.

  19. Estragon commented on Aug 31

    BR – disagree with your comment that it’s likely easier to sell in an area that hasn’t run in price, but also disagree with RC’s comparision to his gold. Gold is the same in Manhattan or Michigan. It’s fungible, and a factor affecting the price in Manhattan almost certainly affects its price in Michigan too. The factors affecting the price of housing are much more local. Without knowing a lot of detail about local factors, any comment on whether a particular discount is appropriate is worthless.

    That said, that a particular area hasn’t run up in price over the past few years suggests to me that demand was relatively weak and supply ample in that area, and absent any information to the contrary, there’s no reason to think this dynamic has changed. It’s just as possible that the factors keeping a lid on price (eg. secular decline in rustbelt industy) could get worse in a downturn, making the “cheap” area even cheaper.

  20. Rusty commented on Aug 31


    I’m not Barry, but my take is that consumption is and has been going into overhang. There are two habits at work that have to get reversed – the first is the standard of living that people have gotten used to, over a long time period, and thus their spending level is “sticky”. The second is that, even when incomes and equity market wealth were declining, and some budget cutting should have been in order, Mortgage Equity Withdrawal was there to pay off the credit card bills and sustain the standard of living for a bit longer.

    Now the MEW is going to become scarce, as home equity is decreasing. The consumer spending continues for a few months beyond that point, via credit cards, but when people go back to the mortgage broker to extract some more equity to pay them off, they might not get the appraisal they need, and now they don’t have any way to pay off the credit cards except the old fashioned way – stop spending, start using income to pay them off.

    That’s when consumption will decline. It’ll be the last domino.

  21. dforester commented on Aug 31


    For what it’s worth, I anecdotally agree with Barry – if your area didn’t go absolutely bananas, and instead had “normal” housing appreciation, you should be alright.

    For what it’s worth, I recently sold in Nashville – and in a “normal folks” area of Nashville; not the uber-trendy downtown/midtown area which has seen some bubblefication, if you ask me.

    I had an offer within a day of being on the market, and I don’t think it was underpriced per square foot – there just wasn’t much in that “affordable” price range. Sans commissions, sale-price-to-sale-price, it gained 15% in 3 years. Nothing spectacular, but steady, solid increases commensurate with the mean.

    Of course, I relo’d to Phoenix, where I’m now renting, and holding the unpopular wish of a nice fat bubble-burst. ;-)

  22. Rusty commented on Aug 31

    Some localities were driven up by speculators, and with the speculators deserting, those areas will have commensurate price drops. Areas that were not infested by speculators will not see this same rapid deterioration.

    The two best examples are Las Vegas and Atlanta. Vegas was a dutch tulip frenzy, speculators buying up every proposed development and flipping it within months. 30%+ appreciation for a couple years there. Meanwhile Atlanta has had 4% price appreciation, flat inventory figures, and with 60,000 homes on the market at any one time was somewhat insulated from the effects of a few hundred speculators.

    Vegas will get whacked, Atlanta will remain pretty flat.

  23. Estragon commented on Aug 31

    Pete – just for fun, I’ll take the other side. Not predicting mind you.

    Housing demand comes not only from population growth, but also from household size. A significant amount of demand recently was likely a result of echo boomers forming households. Demand is also location specific. If there aren’t enough houses where the jobs are, there will be a demand for more. Existing houses in areas where nobody wants to live will end up being taken out of the supply.

    Homeownership rates aren’t so much a function of the % of income spent on housing, but of the relative cost of owning versus renting. If rental housing fills up with your $10/hr illegals, rental pricing will likely rise, making ownership more attractive.

  24. jkw commented on Aug 31

    If rents rise relative to income, people start sharing bedrooms until rents go back down. There is no reason to expect people to be willing to spend a larger portion of their income on housing than they have in the past. Vacancy rates are starting to decline because wages have started to catch up to the rent increases of the late 90s. Students are starting to want one bedroom per person again. Young married couples are starting to rent 2-3 bedrrom units again. If rents rise much, these trends will reverse and vacancy rates will climb.

    The housing supply has grown much faster than the populstion for several years now. There are going to be a lot of empty houses, one way or another. Once people realize they can’t sell their house for as much as they want, they are likely to try renting it out. The increased supply will drive down the cost of housing for both buyers and renters. Unless someone tries to corner the housing market and sit on a few thousand empty houses just so that they can raise rents in a few of them.

  25. Michael C. commented on Aug 31


    All I said were the odds are better. Period.

    I agree the market is in serious trouble.<<< Lyon, I know what you're saying. You would be right if rates were down 0.50% and all else were equal. But all else is not equal. Again, since rates are down slightly, mortgage applications should be up using your "odds." But they are not. So you have less mortgage applications even with lower rates, which means fewer buyers, which means your chance of selling your home is worse not better.

  26. GRL commented on Aug 31

    the seeming contradiction between so resilient numbers from consumption related area and all these dismal numbers from housing market


    Have you looked at earnings coming out of the retailers lately? Checked out auto sales?

    How about that Ethan Allen? Here’s an article for you to take a gander at:


    DANBURY, Conn. (AP) — Furniture retailer Ethan Allen Interiors Inc. warned Wednesday that its sales have further softened in August due to waning consumer confidence, and its move to cut its lead time in filling orders.

    “This quarter we are being impacted by both lower consumer confidence and our initiative, started last July, to reduce the lead time in filling customer orders, said Chairman and Chief Executive Farooq Kathwari, in a statement.

    “The faster backlog turnover reduces the forward visibility of delivered sales, and we are subject to more volatility as demand levels fluctuate,” he added.

    Spin, spin spin.

    How about “reduced consumer confidence” in the quality of the product caused by all the corner cutting and outsourcing of furniture manufacturing to China?

    Couple that with the fact of lower MEW caused by the housing bust, and it’s no wonder the stock is down 10 points from May and still dropping.

  27. howard commented on Aug 31

    sh, to follow up on rusty’s non-BR response about consumption, there have been very large jumps in revolving credit debt the last few months. it’s hard to imagine that’s for anything other than sustaining consumption when all else has failed.

  28. Bob_in_MA commented on Aug 31

    According to loanperformance.com, Atlanta ranks #12 on the list of metro areas with seriously delinquent prime mortgages. For subprimes, Georgia is #3 on the list by state.

    Athens, Ga., is #10 on the list metro areas with highest per centage of interes-only loans (53%). Wisconsin has a higher rate of negative amortization loans than such hot markets as Arizona and New Jersey.

    I agree that if everyone were in a conforming 30-year fixed mortgage, these markets would have little to fear. But the exotic mortgages, soft seconds, HELOCs, etc., have made their way around the country.

    If housing is so affordable are people using option ARMs and interest-only mortgages? There might be nearly the level of danger their is in California, but I’m betting there will be plenty of pain to go around.

  29. Estragon commented on Aug 31

    JKW – I think you’ll find that housing costs as a % of income vary, and do so generally as a function of supply relative to demand. In areas where supply is constrained (whether physically by mountains, ocean, etc. or artificially by zoning), relative to demand, the cost of housing is a higher % of income. England, for example, has stricter planning permissions restricting development than most parts of the US, and consequently has higher relative housing costs.

    Over time, both rental and owner occupied housing costs will rise if supply is constrained relative to demand.

  30. Rusty commented on Aug 31


    No question there is a larger, macro-level impact on local markets due to lending practices and exotic loan products. These lending practices and loans have affected everyone in the country roughly equally.

    It’s just that these risky loans make up a much smaller part of the appreciation than speculators have. I mean, when 50% of a market is speculators, ala Vegas, then having .5% of loans delinquent in Atlanta is not quite as serious of a predictor for a local market crash.

  31. jkw commented on Aug 31

    House prices relative to income have been mostly constant for over 100 years. There are short-term fluctuations now and then, but the ratio is strongly mean-reverting. Every time that house prices have climbed faster than income for a few years has been followed by a period of falling or stagnant prices until the ratio is back in line. The main exception was the great depression.

    When house prices go up relative to income, people leave the area, reducing demand. Many of the cities with the highest house price appreciation have been losing population the whole time. People do not put up with housing eating too much of their income for very long.

    I haven’t looked at rent data, so it might not be as steady. Do you know of a good source for long term rent data? Or rent-to-incomme ratio data?

  32. Bob_in_MA commented on Aug 31

    In Indianapolis the median home price for 2003 was $121,100. Last quarter it was $122,400. So prices certainly haven’t been zooming there. And yet that price was down 1.8% from last year. Falling prices in a stable market? Unemployment is up just .2% from last year in Indiana.

    The conventional wisdom is home prices only fall in markets that have had very high price appreciation and/or massive job losses.

    Neither is the case in Indianapolis.

    How do you explain it?

  33. rebound commented on Sep 1


    $122,000-ish is way below the national average of $240,000-ish. The price range in this region might stay quite steady during a general real estate decline. There might even be a migration into this region because of this affordable housing, which could prop up values and keep things steady.

    The same could be true of the Northwest. Seattle and San Francisco are both very expensive, which might help prop up a more affordable market in Portland … if people are able to cash anything out and move. The net inflow of buyers might help mitigate the decline. Or not.

    Here in the Northwest I can remember the first time I heard a radio advertisement for an interest only loan. It wasn’t very long ago. Maybe a year ago, maybe two. I called a friend in California to ask about his market, and he said these types of loans were very common in his area. This shocked the hell out of me. How were these types of loans ever approved in the first place? It reminds me a bit of Paycheck loans. How did these types of loans ever become “ordinary”. There was some slippery slope that we all fell off of.

    The announcement about WaMu’s mega-billions in unqualified loans really should wake people up.

    Maybe if uncle Ben is nimble he can figure out a way to seriously wake people up by jacking rates up at an “unmeasured” pace for a very brief period, and warn people, again, like Alan Greenspan did about exotic mortgages. Then the Fed could move to lower rates to give the newly anointed “rational” people a chance to refinance into traditional non-exotic mortgages. Or not.

  34. PigInZen commented on Sep 1

    Well, coincidentally, Indianapolis is my market. Yes, the median price is quite low compared to the national median but we’ve slowed here as well – considerably. Currently there’s about an eight-month supply of unsold homes in our area based upon last year’s data and the rate at which houses have sold this year. And therein lies the rub: no matter how much prethought and calcluation goes into getting the comps right and price “correct” there still has to be a buyer interested enough in what you’re selling to make an offer.

    We’re just hoping to have an offer to consider. Average time on the market in our neighborhood is nearly four months.

  35. Bob_in_MA commented on Sep 1

    My feeling is that with wages increasing more slowly than inflation over the last few years, all things being equal, home prices should have gone down in many places in the middle of the country. Low rates and exotic mortgages may masked that and turned it into moderate increases. Now rates have risen and soon there will be a crackdown on exotic mortgages, either by the regulators or the bond market.

    The markets in the greatest danger are those with a high percentage of subprimes.

  36. dd commented on Sep 1

    The Arizona Republic. “There is a three-year supply of homes on the market in Johnson Ranch near Queen Creek, a real-estate agent told reporter Betty Beard. Agents are encouraging sellers to, gasp, lower their prices, sometimes below appraisal. Throughout the craziness last year, a few moderating voices warned of the inevitable ‘bubble,’ but there was no sense that it would burst so soon.”

  37. Antonio from Miami commented on Sep 2

    i am observing how the housing bubble deflates here and around the country.

    We are not creating many new or high paying jobs with which to pay the increasingly high monthly payments for the mortgages of houses purchased in the last 3 years.

    Most of the monthly income is dedicated to pay mortgage, real estate taxes, insurance, and to repay the home eqity lines of credit from which 90% or more of the buyers have been taking money to purchase or repay other debt.

    Food is more expensive every day, but maybe the members of the federal reserve do not go to the supermarket.
    I sold a house last year to an investor, he paid $200K, and now is trying to sell it, it has been 6 months and it has been imposible for him to flip this house. At this point I am scare because there are more houses in the market, but no buyers.

    If you wanted to buy a house you bougth it in the last three years, if you did not buy it was because you were not interested. Real estate is dead, but the results have not strated spreading yet. please pay attention to the retail numbers these will be coming down pretty soon since the ATM’s (housing) is out of breath.

  38. Thomas commented on Jun 25

    Remember the sub prime is really bad.I am a mortgage broker and i can assure you that things could be getting worse before improving.
    Every deal is a problem either with appraisels or loan to value.
    [Not every,but a lot]And banks watch each loan very carefully.I believe that in some states lenders have eliminated 40% of the buyers.Good luck everyone.

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