Existing Home Sales Fall 4.6%
Home prices dropped 15% from the same period one year ago; Despite the price drop, sales fell 4.6%. How anyone can try to spin this as a positive is beyond my mathematical comprehension.
Even the NAR reported that “overall sales activity remains relatively soft,” as existing-home sales increased in February (month over month).
This was another weak housing report. Do not be fooled by the monthly gains, as we have been saying for 4 years now, as they are meaningless (see chart at bottom):
-Single-family home sales rose 4.4% to a seasonally adjusted annual rate of 4.23 million in February. They fell 4.6% from the 4.95 million-unit level of February 2008;
-Distressed properties accounted for 45% of all sales;
-Home foreclosures were up 30% in February from a year earlier;
-The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago.
-The median existing single-family home price was $164,600 in February, down 15% from a year ago
-Total housing inventory at the end of February rose 5.2% to 3.80 million existing homes available for sale, a 9.7-month supply at the current sales pace.
-The absolute number of homes for sale rose to 3.8 million from 3.6 million
-The West continued to see the biggest drops in prices due to foreclosures.
While there was a healthy increase in sales from January, a look at the non-seasonal data might be instructive: As expected, the gins are primarily seasonal in nature, with January the worst sales month of the year, and February the start of modest seasonal improvements.
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Existing Home Sales, Non-Seasonally Adjusted
chart via Calculated Risk
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Sources:
Existing-Home Sales Rise In February
NAR, March 23, 2009
http://www.realtor.org/press_room/news_releases/2009/03/february_existing_home_sales
March 23rd, 2009 at 12:38 pm
I knew that news release smelled fishy
March 23rd, 2009 at 12:46 pm
After months of preaching against Republican supply-side Keynesian evil, I spent a little time on DailyKos preaching against Democratic supply-side Keynesian evil. The leftwingnuts are defending Tim Geithner as if he were Mother Jones. You were right to moderate a few of my one-sided rants, Ritholtz.
Keep this up, Ritholtz. The only lasting liberty from tyranny is the undying pursuit of truth.
March 23rd, 2009 at 12:50 pm
Why does anyone even bother to read anything put out by the NAR given how discredited it this organization is.
March 23rd, 2009 at 12:51 pm
Has anyone seen Lawrence Yun? I’m starting to get a little worried about ol’ Larry.
March 23rd, 2009 at 1:04 pm
That graph says it all.
March 23rd, 2009 at 1:07 pm
“How anyone can try to spin this as a positive is beyond my mathematical comprehension.”
I’ll help you out. We’re closer to the bottom. The rate of decrease in house sales have been attenuated.
March 23rd, 2009 at 1:15 pm
That is true — its “less bad” than before.
But is “less bad” the new good?
March 23rd, 2009 at 1:20 pm
But is “less bad” the new good?
For all those hanging on to yesterday, YES
For those looking to tomorrow, NO
March 23rd, 2009 at 1:32 pm
“The rate of decrease in house sales have been attenuated.”
Second derivatives seem all the rage these days. Yes, it is still going down, but not so fast as before.
When a comparison is made with a prior month, it’s utterly silly, as BR’s graph points out. Never mind that when properly making the comparison to a prior year, the year in question was one where the real estate market was cliff-diving. Thus, we have a 4.6% decline from a month a year ago that had already seen a dramatic decline from a year prior.
March 23rd, 2009 at 1:34 pm
SKF back to $107.
Any brave souls out there?
March 23rd, 2009 at 1:38 pm
On a purely anecdotal basis, things have started moving faster here where I live. My mom started looking for a house last month and several of the ones she looked at sold before she had finished checking all the alternatives (a period of two weeks). One street went from 4 houses for sale to just one in the period of 3 days.
March 23rd, 2009 at 1:39 pm
yes and no. I suspect you’re right on the ball, as always – however, the article references seasonally adjusted data, whereas the chart does not. To be fair, you should note whether or not (and why) this may or may not be significant.
March 23rd, 2009 at 1:42 pm
BR wrote:
“How anyone can try to spin this as a positive is beyond my mathematical comprehension. ”
Well Bloomberg didn’t just try, they DID it!
U.S. Home Resales Unexpectedly Increased in February
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNyqmWIhEdZA&refer=home
March 23rd, 2009 at 1:45 pm
@ CNBC Sucks Says:
“I spent a little time on DailyKos preaching against Democratic supply-side Keynesian evil. The leftwingnuts are defending Tim Geithner as if he were Mother Jones.”
The problem is- when a person is truly political they have blinders on- they will agree with “their man” regardless of policy. Same thing when the Republicans fell in lockstep behind Bush when we invaded Iraq- except for a few brave souls such as Pat Buchanan. That is the problem with being a true partisan- you throw all practicality and reason out the window.
March 23rd, 2009 at 1:47 pm
@DL said: SKF back to $107. Any brave souls out there?
Raise cash, by all means. But don’t stand in front of the tanks….
Wait for the $ to show a clear upward reversal before joining Mr Shorty.
Lawrence Yun is heavily sedated ever since doing a panel with BR.
“Monthly gain in home sales. It’s a mustard seed, Ritholtz..” (Kudlow)
March 23rd, 2009 at 1:50 pm
It looks like homes in Northern California are selling faster….but a look at the data shows that these are the homes under $200k. Prices have dropped back to 1999 levels–less than half of 2006 prices.
March 23rd, 2009 at 1:53 pm
No, Yun is right here: http://lansner.freedomblogging.com/2009/03/23/west-leads-us-in-homebuying-boost-price-cuts/17377/
March 23rd, 2009 at 1:57 pm
My source out west tells me that FHA loans (3% down) are all the rage in Northern Cali. Better than nothing down, I guess, but I have an uneasy feeling about how that’s going to work out (or not).
March 23rd, 2009 at 1:58 pm
I find these charts to be as dishonest as the NAR. Why only go back to 2005, as the market became superheated? Shouldn’t these go back to at least 2002 or so, when you could say the market was more normal? No doubt the fraction of these sales that are distressed is disturbing, as is the inventory data, but only going back to 2005 seems like cherry picking to me. Step outside the current frenzy and look at the data back to 2000 and draw a line with a couple of percent annual growth to account for population growth. Seems to me like lower sales as a correction to high sales over the previous few years is a pretty much what you’d expect. Add to that a tight credit market and high unemployment and these numbers almost look good compared to what they should be. You can even make the argument that the only reason sales are as high as they are is because of foreclosures. But the bottom line is that foreclosure, inventory and price data are all very bad, but I don’t see how the number of sales by itself is really that bad. Some more data outside of “superheated” and “supercooled” might give a better frame of reference.
~~~
BR: Wrong.
These are sales since the peak. The chart shows the overall RE market remains in a downtrend
March 23rd, 2009 at 2:05 pm
My Naples FLA connection says there are 2br condos for sale in Naples for under $50,000 (way on the eastern edge, ie not by the ocean).
March 23rd, 2009 at 2:05 pm
@ Mannwich-
FHA loans have been around a long time and yes they do allow a low down payment. Also- credit does not have to be stellar. However a person does have to qualify- i.e. their income and assets are documented. Also- they are self insured- the buyer/borrower pay a mortgage insurance premium up front at closing and a monthly fee thereafter. I think the track record on these loans have been pretty good.
March 23rd, 2009 at 2:07 pm
@call me ahab: Thanks for the heads up. Yes, I’m aware of that but if these buyers lose their jobs/incomes all 0f a sudden in a increasingly weakening economy, then all bets are off (obviously).
March 23rd, 2009 at 2:10 pm
Also, 3% down on a $500-$600K purchased home isn’t a lot of equity cushion if prices keep declining pretty signficantly (which they may very well do). Seems very risky to me given the job prospects for many in Cali (10.5% unemployment rate).
March 23rd, 2009 at 2:21 pm
@ Mannwich-
good points- the max loan is actually (in high price areas at least temporarily) is $729,750. The big difference is that the buyers in these homes aren’t buying to flip the house-they are for the most part legitimate purchasers who intend to live in the properties. Can they lose their job- sure – but that has always been the case.
March 23rd, 2009 at 2:22 pm
Give me liberty, or give me a house.
March 23rd, 2009 at 2:27 pm
We’re doing our part to make things infintessimally less bad. After years of renting we’ll be closing on a place next month. PITI with a 30-yr fixed are about 20% less than renting and we picked it up for sale by owner from an owner who bought it long enough ago that she’s not leaving the transaction bleeding. A highlight was going Realtor-free. Just a meeting with the seller over coffee, a few tense moments of back and forth a few times over the price then shaking hands. All that junk you sign when you make an offer with a Realtor is just paperwork to indemnify the Realtor who probably lied to you when he said “this is a great investment,” “the place has several offers, but I think you can still get one in,” and “the market is really hot – if you don’t get in now you’ll never have another chance.”
CNBC Sucks – I used to follow DailyKos because I lean that way, but the site has gotten so extreme I don’t bother. Even though I voted for the guy, I can’t figure out the hero worship for Obama or his cabinet picks. All he’s done so far is to undo some of the more easily reversed lame religion-influenced Bush policies.
March 23rd, 2009 at 2:43 pm
Agreed ahab, although I think the risk of losing one’s job now (in general) is far greater now than before. I, for one, would love to sell my place to anyone and just get roughtly what I paid for it in ‘05 (I laugh at Zillow’s estimate saying it’s “worth” $420K or so, we bought for $376,5K, in great spot but no way would we get $420K now) and get the heck out of dodge. We love the house but it’s a money pit (built in 1921). Makes me appreciate the renter days when we had a “super” to call when something went wrong.
March 23rd, 2009 at 2:48 pm
@ SWMOD52
“My Naples FLA connection says there are 2br condos for sale in Naples for under $50,000 (way on the eastern edge, ie not by the ocean).”
This last weekend in Orlando near the airport, saw many hand-lettered signs along Semoran Blvd, e.g.,
“Fully Furnished 2BR/2Ba Condo $85,000 Cash Only”
A former local, back in town to rent his home, said it’s near pointless to list with realtors who have too many listings to show.
March 23rd, 2009 at 2:59 pm
@ Mannwich-
you are cetainly speaking the truth- I am in the process of rehab’ing a circular staircase- what a nightmare- especially since I am trying to do it myself. I had some contractors in a few years back to have new steps put in and no-one would touch it becuase it is not a cookie cutter staircase. Every time I turn around and think everything is good to go, something else breaks. Like I tell my kids, if I was really rolling in the money I would be going from place to place and would’nt own a damn thing- not trying to be zen or anything but possessions are truly a pain in the ass.
March 23rd, 2009 at 3:03 pm
Totally agree. In the end, your possessions own you. There’s something to be said for living as simply as possible. Tough to do in reality though. Lean & mean is the way to go. I think more people are finding out the virtues of that adage these days.
March 23rd, 2009 at 3:09 pm
Mannwich Says:
“Lean & mean is the way to go. I think more people are finding out the virtues of that adage these days.”
Whether they want to or not- hahahaha
March 23rd, 2009 at 3:43 pm
batmando
Markets are different. I’m in suburban Chicago. I refinanced last week; 5.25 no cost with the same broker /bank as I had refinanced with last Sep. No new apprasial or refile of bank statements etc. Just checked employment. Closer came out to the house. Mentioned this to my Naples guy and his jaw dropped. I guess Florida is strictly a cash market now. If rates drop to low 4s I expect to refinance there for no cost. I need to talk to my realtor connection tonight. Intersting to see how she sees things.
March 23rd, 2009 at 3:52 pm
Barry Ritholtz Says:
March 23rd, 2009 at 1:15 pm
That is true — its “less bad” than before.
But is “less bad” the new good?
……Basically yes…..I don’t know what’s happened to the R/E on your side of the sound but I’d say in pricing definitely and probably volume too, it’s bottomed in CT…….I’m just refi two properties in the state at 4.5%, sorry SWMOD, but yu are absolutely right….The US is not one big homogenous market for R/E.
March 23rd, 2009 at 3:59 pm
batmando Says:
March 23rd, 2009 at 2:48 pm
….Perhaps I should take a trip to FL……The fact is though all this is very concentrated….remember 82% of the foreclosures are in six states….Going back a year both Baltimore and Atlanta were in the top 15 distressed city list and my info from reliable sources is that they have either stopped falling (Balt) or it’s slowed dramatically(At).
March 23rd, 2009 at 4:02 pm
call me ahab Says:
March 23rd, 2009 at 2:59 pm
“not trying to be zen or anything but possessions are truly a pain in the ass.”
…….you can say that again…..we have one of the highest “stuff quotients” in the US….how about 3500 books for starters
March 23rd, 2009 at 5:16 pm
Won’t/can’t happen here, right?
======================
Japan Home Prices Slump to 24-Year Low as Recession Deepens
By Katsuyo Kuwako
March 23 (Bloomberg) — Japanese residential land prices fell to a 24-year low as job losses and wage cuts discouraged homebuyers, while tighter credit markets choked off funding for property developers.
Residential land prices fell 3.2 percent in 2008 to the lowest since 1984 and average commercial land prices dropped 4.7 percent to a three-year low, the Ministry of Land, Infrastructure, Transport and Tourism said today in a report. Overall property prices declined 3.5 percent, erasing two years of gains that followed a 15-year slump.
The decline in residential land values, which are about half of what they were at the height of Japan’s bubble economy in 1991, may continue as the recession deepens. The central bank forecasts the sharpest economic contraction in more than 60 years as an unprecedented decline in exports forces companies to cut production and fire workers.
…
http://www.bloomberg.com/apps/news?pid=20601101&sid=abSwutZwawMA
March 23rd, 2009 at 5:24 pm
set yourself free otto- donate them to the library- keep the ones you reference all the time of course- but the others- why keep them?
March 23rd, 2009 at 5:32 pm
It would be interesting to understand the correlation between home sales and rates. I think sales will increase simply due to lower rates as opposed to the expectation of appreciation.
March 23rd, 2009 at 5:37 pm
@ Moss-
you are absolutley right- in a real market people buy what they can afford because they plan on being there a while and low rates make a home more affordable. In a bullshit market people are spculationg and are betting only that they can re-sell soon at a higher price. Two different dynamics.
March 23rd, 2009 at 6:19 pm
call me ahab Says:
March 23rd, 2009 at 5:24 pm
……Well my wife would say….Books do furnish a room……I’d say I like re-reading books and I have to refer to them sometimes when you guys gang up on me…
March 23rd, 2009 at 6:44 pm
@CNBCSucks: “After months of preaching against Republican supply-side Keynesian evil, I spent a little time on DailyKos preaching against Democratic supply-side Keynesian evil. The leftwingnuts are defending Tim Geithner as if he were Mother Jones.”
CNBCSucks is correct. The Hope Zombies are now wandering aimlessly and hungrily through the foreclosed mall of their own imaginations.
It is not a pretty sight.
And I’m a Marxist.
March 23rd, 2009 at 6:53 pm
otto-
you crack me up- you love the attention- don’t deny- and you’ll get plenty of attention when you are one of a few dissenting views- but it’s ok- I don’t like the tunnel vision thing- I like to get other views.
March 23rd, 2009 at 7:17 pm
@DL
who cares about SKF, the action this year will be to watch SRS, should be lots of opps to trade that one this year.
March 23rd, 2009 at 7:32 pm
Since September the Y-o-Y changes have been fairly modest. With reality beginning to be reflected at the price level, and the incentives from the stimulus plan beginning to take effect soon, I think the Y-o-Y changes will continue to be in the low single digits and more likely to turn positive than remain negative, by the end of spring.
March 23rd, 2009 at 8:20 pm
@ben22: I’m with you on SRS. Just biding my time. Still mostly long cumulatively in my portfolio but I love SRS as a medium term play here (and still hold a small amount). I can’t see how that one doesn’t have at least a few more runs in it to the upside.
March 23rd, 2009 at 8:37 pm
Got SRS?
http://www.bloomberg.com/apps/news?pid=20601109&sid=aR72TKlxCQ7A&refer=home