"David F. Seiders, chief economist of the National Association of
Home Builders, said the unexpected weakness in recent months had caused
him to shave his forecast for housing construction this year. It now
shows a fall of 23 percent after a 14 percent drop in 2006." (emphasis added)
>
I spit my coffee out all over my keyboard when I read that WTF?!? line this morning. Unexpected weakness? Seriously, some of these housing shills are starting to make Baghdad Bob look like a respectable spokesman.
What did he actual data show?
Well, for starters, we see sales of existing homes fell 3.8% — the fourth consecutive monthly drop — to a seasonally adjusted annual rate of 5.75 million units. For comparison purposes, this brings us back to the levels last seen in November 2002 — prior to the ultra-low interest rate driven boom really ramped up.
On a year-over-year basis, June sales were off 11.4%.
Resales of single-family homes fell 3.5 percent to an annual rate of 5.01 million. Sales of condos and co-ops fell 6.3 percent to a 740,000 rate. Total Inventory dropped by 4.2%, a positive development.
The more volatile New Home Sales data are released later this morning.
The media frequently mentions median price in these reports, but rarely explains what it means. I should give kudos to AP for at least making a partial attempt at clarifying the data. They noted "The median [price] is the point where half the
homes sold for more and half for less." Ideally, one would explain that this can be skewed by either a drop in low end home sales or an increase in high end sales during the present weakness (and vice versa during the recent boom).
And while I am handing out platitudes, Bloomberg gave good color on how both the New Home Sales and Existing Home Sales data are assembled:
"Monthly figures on home resales are compiled from contract closings and may reflect sales agreed upon weeks or months earlier, while new-home sales are recorded when a contract is signed. Sales of existing homes account for about 85 percent of the U.S. housing market, and new-home sales make up the rest."
Perhaps this means all those rants were not for naught . . .
>
UPDATE: July 26, 2007 10:05am
Miller Tabak’s Peter Bookvar notes that "June New Home Sales totaled a weaker than expected 834k, 56k less than expected and May was revised down by 22k. It’s just shy of its lowest level since mid 2000. Months supply rose to 7.8 months from 7.4 in May. The recent high was 8.3 in March. The median price fell 1.2% sequentially. This # measures contract signings of new homes and a weaker than expected # is certainly not surprising considering what we’ve heard from many homebuilders over the past few weeks.
Keep in mind that this data series is particularly unreliable, and subject to subsequent revision; to get a truer read, try using a 3/6 or 3/12 month moving averages."
>
Sources:
June Sales of Existing Homes Fell 3.8%
ASSOCIATED PRESS, July 26, 2007
http://www.nytimes.com/2007/07/26/business/26economy.html
Home Resales in U.S. Fall 3.8% to 5.75 Million Rate
Joe Richter
Bloomberg, July 25 2007
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abCy7BmqWaYc
“This invasion will end in failure.”
baghdad bob
Rather prescient in light of whats going on in Iraq.
Off topic, but look at the Yen and Swiss Franc this morning…
Sorry Fred (and the other perma-bulls), but it’s going to be a brutal day on the street…
Well, according to this – http://money.cnn.com/2007/07/24/real_estate/housing_countrywide.reut/index.htm?section=money_topstories – things should get better in 2009.
Barry,
For most of the folks who read your blog, you are preaching to the choir with this one.
Maybe my generation will be able to afford a home in a few years . . . as long as we still have our jobs.
I think this sums up things nicely:
http://www.workingforchange.com/comic.cfm?itemid=22163
Pool Shark-
Not as bad as it should be……gunning those SPY’s just cut the loss in half. Pretty effing obvious too.
AS I said yesterday this market needs a heavy dose of ritalin to cure it’s A.D.D.
Ciao
MS
As the Countrywide man said, who could have seen the real estate downturn coming? Gosh. Such a surprise.
Who could have known that Iraq would be a sectarian quagmire? Gee willikers.
Who would have thought that outsourcing almost our entire manufacturing base might come back to bite us on the heiney? Jeepers.
Who could have possible foreseen that airliners could be used as flying suicide bombs? Golly.
Who would have guessed that the home run kings of the ’90s were on steroids and growth hormone (aside from anybody who just looked at them)? Yikes.
Quite the country we’ve developed here, yessiree.
But don’t worry–Dow 14,000!
(Say, Barry, wasn’t Big Pic getting an active link feature for comments? Or do I misremember?)
It’s not just the NAHB. Pretty much every organization or spokesperson interfacing the public seems to have a pre-determined bias to err or skew the data to alice in wonderland, don’t worry be happy side of the debate. Certainly there are a few that are advocating for over the wall doom and gloom hype. Rather, how about calling it for what it is and inject some prudent caution when warranted instead of the constant mindnumbing spin spin spin. I for one find it insulting as they either believe we believe it ergo are that dumb and uninformed, or are they are so entrenched now in their positions and arrogant enough simply just to not give a damn whether we know they’re full of it.
I can only imagine what our old friend David Lereah would be spewing out today.
Unfortunately, I have to give him credit for the smarts to bail from his job when he did. Still, I miss, being able to get some chuckles out of listening to him spin crap into gold.
Stuart,
Employees who do what you propose are fired for “having a bad attitude”.
What we need now is Paulson to come out and proclaim the housing market has bottomed again and all is contained. As I’ve mentioned before it’s obvious they need a bigger “container”. Nevertheless, I’m sure once Paulson shows his head again and announces it’s all A-OK, we’ll all be relieved. The only bigger container needed is the one to hold the kool aid. Apparently there’s a few more drinking it.
forgot to add, given consensus for Q2 GDP is 3.2% I believe, with lower than expected housing, retail sales, business inv,…3.2% seems to be adpt for a “surprise” downside miss. 2.6% anybody?
Once again, a spike down in the dollar down to 80 then the miraculous rebound just as this morning on wonderfully dollar bullish news.
Sales of new homes declined 6.6% in June to a seasonally adjusted annual rate of 834,000, the Commerce Department estimated Thursday. Sales are now down 22.3% compared with June 2006. The sales pace in June was the lowest since March’s 830,000, which was the lowest since 1999. Economists were expecting sales to fall to an 890,000 annualized pace in June. Sales dropped in three of four regions. Sales in the West fell 22.5% to the lowest level in 12 years. Inventories of unsold homes were unchanged at 537,000. The median sales price was $237,900, down 2.2% compared with June 2006.
dark1p,
LMAO…, umm, that’s not funny.
I went to The Big Picture and looked at the first post, then scrolled down to this one, past the title “Unexpected Weakness…”, then scrolled down a bit more and what do I see?
Baghdad Bob!
Very funny.
Sweeny–
What makes you think any of my comment was supposed to be funny? I’m pissed as hell.
dark1p,
The active link feature works right now, and there are some prior posts from Barry on how to do it. Sorry I don’t have the info handy. I think you just put the tags right in your post.
Many of us are angry, but we are finding that avoiding too much political banter helps keeps the threads here tolerable and focused on markets, econ, and so fourth. It gets nasty really quickly. I know these topics are are all intertwined, so this is just an appeal to keep things civil as possible. When the posters here are not attacking each other, they do a pretty darn good job of exploring the subjects at hand.
dark1p,
I know it’s not funny. I’m also pissed as hell. I was trying to compliment you on your cynical take on the state of our country and our leaders. It’s gonna take a revolution to fix things, peaceful or otherwise, and a disappearing middle class just might be the catalyst.