Existing-home Sales Fall 3.5%
I always enjoy fighting my way through the nonsensical press releases from the National Association of Realtors. At one time, it was a bit of a challenge, but its become much easier once I figured out that they are a PR trade group, and not a legitimate source of honest economic commentary. Its as if a really dumb Will Shortz put out crossword puzzles, or made some for those suffering from blunt force head trauma.
This month’s release was especially easy — the data alternates paragraphs with the NAR spin. Strip out the PR bullshit, and what you are actually left with is straight up data.
• Existing-home sales increased 2.9% (seasonally adjusted annual rate of 4.68 million units) in April from a downwardly revised pace of 4.55 million units in March.
• Sales were down a modest 3.5% from April 2008.
• First-time buyers in April declined to 40% of transactions (NAR survey).
• Nationwide, the median existing-home price for all housing types was $170,200 in April, down 15.4% below April 2008.
• Distressed properties accounted for 45% of all sales in April;
• Total housing inventory at the end of April rose 8.8% — about 4 million existing homes — a 10.2. month supply;
• Single-family home sales rose 2.5% from March (seasonally adjusted annual rate of 4.18 million);
• Sales are 2.8% below the March 2008.
• The median price for existing single-family homes was $169,800 in April, which is 14.9% below a year ago.
The increase in inventory is somewhat worrisome, and supports our thesis that any stabilization in sales or prices will bring out more shadow inventory. (I would need to see the data on past inventory increases to see if Lawrence Yun’s statement, “The gain in inventory is largely seasonal from sellers entering the spring market” is remotely accurate.)
Rex Nutting noted that while most of the sales taking place are in the low-end of the market, “sales of homes priced above $750,000 have collapsed . . . The high-end has been decimated by the inability of many homeowners to sell their home in order to trade up. Most don’t have the collateral to get a loan.”
Note the red line — we are still tracking the past few years seasonal trends:
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Existing Home Sales, NSA
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•
Sources:
Existing-Home Sales Rise in April
NAR, May 27, 2009
http://www.realtor.org/press_room/news_releases/2009/05/ehs_rise
Home sales rise 2.9%, boosted by foreclosures
Prices drop 15.4% while inventories continue to climb
Rex Nutting
MarketWatch May 27, 2009, 10:00 a.m.
http://www.marketwatch.com/story/home-sales-rise-29-boosted-by-foreclosures-200952710000
See also:
Mortgage applications fell 14.2% last week: MBA
Amy Hoak
MarketWatch, May 27, 2009, 7:07 a.m. EST
http://www.marketwatch.com/story/mortgage-applications-fell-142-last-week-mba
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May 27th, 2009 at 10:22 am
Surely this is better than expected.
May 27th, 2009 at 10:23 am
In a rational market, this news coupled with the 10-yr. doing a dumpster dive would have caused a sell-off in equities. The stock market is the Energizer Bunny on Viagra.
May 27th, 2009 at 10:26 am
Of all of the items on the economic calendar, why don’t we ever read about state sales tax receipts? Why are these data always tucked away on someone’s blog?
May 27th, 2009 at 10:29 am
Inventory – the only number that counts. It’s a dead selling season in Connecticut, I can tell you that much. Realtards are doing their own open houses because there are no bids or closings. Sellers are in fantasy land.
May 27th, 2009 at 10:31 am
All we can expect, and all we should be hoping, is stabilization in the housing market. Growth isn’t going to be driven by housing. Instead, it’s going to be driven by the President’s economic agenda to restore that thing that George HW Bush and George W Bush said the American economy didn’t need: manufacturing.
Put briefly, it turns out that it actually does make quite a bit of difference if an economy is built on making computer chips versus making potato chips.
May 27th, 2009 at 10:37 am
@f411
“Growth isn’t going to be driven by housing.”
It isn’t going to be driven by more government deficeit spending, either. You are trying to borrow from future generations so that today’s kleptocracy can continue to enjoy their reign.
May 27th, 2009 at 10:39 am
@franklin411: I don’t entirely disagree but you’re dreaming if you think the President’s economic agenda is going to immediately turn around a country that has done decades of harm to itself structurally and is buried in debt publicly and privately. Piling on more debt on top of debt won’t work but it will delay the day of reckoning a little longer.
May 27th, 2009 at 10:42 am
http://blogs.wsj.com/marketbeat/2009/05/27/existing-home-sales-beat-expectations-but-inventories-rise/
Existing Home Sales Beat Expectations, But Inventories Rise
“But perhaps a more important number to look at is existing inventory. Inventories of previously owned homes jumped 8.8% at the end of April to a 10.2-month supply at the current sales pace, versus a revised 9.6 months of supply in March.”
…Guys, nothing is going to reverse the trend to send manufacturing to the lowest labor cost countries…nothing..it is what it is….
May 27th, 2009 at 10:44 am
“The high-end has been decimated by the inability of many homeowners to sell their home in order to trade up. Most don’t have the collateral to get a loan”
True, the jumbo loan market is basically dead. The higher interest rates for large loans and the collapse of almost all commission and bonus-dependent incomes are going to crush the high end. As soon as people run through their reserves and the foreclosures start to appear at the high end, there is going to be an absolute meltdown.
@f411: If you want a growth industry for the next few years you should look into pawn shops and tag sales…
May 27th, 2009 at 10:46 am
@Bruce: Nobody predicted that “better than expectations” would be the term of the year but it’s certainly shaping up as such. Good grief.
May 27th, 2009 at 10:49 am
@Mannwich
It’s not going to be an immediate turnaround. We drank quite a bit of poison during 30 years of Reaganism, and we’re not going to fix America overnight. What I’m looking economically is to: 1. stop falling (we’re at that point now); 2. start chipping away at unemployment until it reaches a manageable and less socially destructive level (6-7%?); 3. Troll along that way for quite some time (years) until policy has a chance to kick in. What I’m looking for policy wise is: 1. Major investments in education, science and infrastructure, leading to 2. a more educated workforce and a more efficient manufacturing base, leading to 3. a restoration of sustainable prosperity.
Think about what that entails: it takes decades to raise and educate a child to adulthood. And it takes years to reverse the consequences our aggressive tax-cutting, leading to a decades-long failure to invest in our future prosperity. You can’t send a kid to crumbling schools for 12 years and then say “OK, here’s a $4000 grant…go to college and become a physicist!” It will take decades to reverse the economic terrorism Reagan inflicted on this country.
May 27th, 2009 at 10:49 am
Manny:
When I was a kid and got into trouble at school…better than expectations was just getting a whippin’ either at school or at home, and not getting them both! That may be our economy….
May 27th, 2009 at 10:50 am
Bruce, you mean like this? http://laht.com/article.asp?ArticleId=335481&CategoryId=14091
I posted it yesterday but don’t think you saw it.. green shoots for mexico as DL pointed out.
May 27th, 2009 at 10:51 am
On another note – trying to re-fi out of my ARM (resets in ’12) mortgage and all they’re offering is a 5.375% rate on a fixed 30-year, which is higher than we currently have (5.25%). Our FICO scores are around 800, we don’t carry any credit card balances, are never late on any payments on anything, will have paid off both cars within 8 months or so (and don’t plan on buying a new one any time soon), have plenty of savings and investments stashed away, and we can easily make our mortgage payment every month. I’m a little disappointed in the rate and baffled by some of the arcane charges on the application (e.g. was told the appraisal would cost $395 but on the app it says $525).
@Curmudgeon: If you’re out there, should I be haggling for a better rate? And should I be worried about the fine print on the application and bait & switch tactics, even now after all we’ve seen? I thought some folks were getting around high 4′s?
May 27th, 2009 at 10:55 am
@ f411 10:49
My God, man, your prescrption is the the Japanese solution. Stop consumming soy products with your greeen shoots.
May 27th, 2009 at 10:56 am
Franklin:
You need to lose the political anchor bud. Who has been filling your head with this dreck? I am no fan of Obama, but I do see he had two choices and made one…and was elected democratically, and I assume he is doing his best. Let me give you a little story…
I went to a rural school in Mississippi as a child. Same school, all 12 years. One of the poorest school districts in the nation. About 60 in the graduating class. Fully 2/3 finished college. Several doctors, lawyers, many have had excellent jobs all their lives. This school existed on a pittance compared with California schools. We were so poor we didn’t realize it, because everyone else was in the same situation.
Why did that school system turn out such achievers? Well, it wasn’t money.
Politics is just an excuse for someone like you to fail. Don’t take it.
May 27th, 2009 at 10:57 am
any increase in inventory is bad news for housing and only portends further downward pressure on home values
tough slog ahead
May 27th, 2009 at 10:57 am
franklin,
I’m sorry but your ignorance is really coming through today. Here is one example:
2. a more educated workforce and a more efficient manufacturing base
Franklin, we have increased productivity tremendously here over the years. Do you see average people sharing in the wealth created as a result? No.
As Bruce said above, and I hope you are taking notes, manufacturing goes to the cheapest place, clearly that isn’t here.
Are you spewing this garbage to your students?
May 27th, 2009 at 11:00 am
mannwich,
use a free mtg calc on the net to figure the break-even out, if you plan on staying there for a while, it might make sense to pay a pt to get a lower rate, I’m seeing lower rates than that with a pt.
also, you might want to wait, don’t forget that the bond buying plan isn’t really in full effect and just a few weeks ago rates were much lower. I had a client lock in with WFC at 4.5 a few weeks back, with a pt. She’s staying in her house forever though, you might not have that same goal.
May 27th, 2009 at 11:02 am
@Bruce: I would also surmise that a big problem with our schools today is not necessarily funding (although in some areas that is undoubtedly true) but one of culture and parenting (and political/bureaucratic inertia in the schools), which are not so easily fixed. Some teachers I know say the parents expect the schools to be de facto parents once they drop their kiddies off. Like many things, it’s a multi-factored issue but just throwing money at it alone isn’t going to fix it.
May 27th, 2009 at 11:04 am
@ben22: Thanks for the heads up. I think we’ll do that. I’m going to check with WFC as well. We still do our banking with them, so maybe they can offer a better rate.
We may ultimately try to sell this place soon but probably won’t do that until we get more clarity on my wife’s company/job situation. It’s taking a bit longer than I thought it would.
May 27th, 2009 at 11:06 am
Gillette, you say? We know a little bit about Gillette here in Boston . . .
http://www.boston.com/business/articles/2008/08/07/gillette_to_cut_215_jobs_in_s_boston/
May 27th, 2009 at 11:09 am
“The Andover plant, which manufactures aerosols and shaving care products, will add packing and warehousing operations once the second Devens factory closes. The facility in Mexico will take over the majority of the packaging and warehouse operations from the Devens plant. The remaining operations will be shifted to Mexico in 2010, when P&G’s lease expires in Devens and the plant will officially be closed.”
Ay caramba!
May 27th, 2009 at 11:09 am
Cursive-
as an aside- I hear that soy products produce dangerous side effects in men-
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/25/AR2008072502985.html
May 27th, 2009 at 11:12 am
@Transor Z: My high school reunion this past weekend was in Devens right near that plant. Was a big deal in town when that plant was built. In fact, one of the rationales/selling points for closing Fort Devens (at the time, as it was called) was for industry to come in there and replace it on the base. I think there is a pretty big prison there now as well. Maybe they can build more prisons on Devens to replace companies like Gillette who are high tailing it out of Dodge or we could outsource our prisons to Mexico, start more wars, and re-open Devens as Fort Devens again?
May 27th, 2009 at 11:14 am
Yes, Karen, exactly so…
May 27th, 2009 at 11:18 am
@Bruce:
My dad was poor growing up too. In fact, he went to a racially segregated school. Like you, he did well. Why? Because when he reached college age, a university education was free to anyone with the brains and the desire to have one. A stark contrast with the challenges faced by today’s generation.
And as I pointed out earlier, California is below the national average in state spending on education. We’re below average on state spending for hospitals too.
What are we above the national average on, spending wise? Prisons.
May 27th, 2009 at 11:23 am
Folks, go easy on Franklin411. He’s the only contrarian here. And he makes much more sense (to me anyways) than some of the bulltards who occasionally posted here during 2006-2007. He gives you an opportunity to question your thesis. Everyday. We should appreciate that.
Where ambiguous, try to interpret his remarks in the most sensible way possible, so that you don’t force him to reply to clear up matters that you could’ve — should’ve — interpreted better on your own. He’s been good enough to reply to practically everything. I don’t know that he can afford the time to do that.
…
FYI, these days, I’ve been traveling but lurking. I don’t comment much because I have little to add, after having nodded my head in agreement to most of what the rest of you (including Franklin411) have to say.
May 27th, 2009 at 11:23 am
Mannwich,
When you refi, make sure you go back to your original title company and request a re-issue otherwise you will be spending 3X as much for a new title and title insurance which is completely unnecessary. The broker won’t tell you this since they are usually very chummy with their title company of favor.
May 27th, 2009 at 11:25 am
“Because when he reached college age, a university education was free to anyone with the brains and the desire to have one. ”
was this France
May 27th, 2009 at 11:25 am
Where ambiguous, try to interpret his remarks in the most sensible way possible, so that you don’t force him to reply to clear up matters that you could’ve — should’ve — interpreted better on your own. He’s been good enough to reply to practically everything. I don’t know that he can afford the time to do that.
Signed, Franklin’s Mother
May 27th, 2009 at 11:25 am
these numbers are consistent with a stabilization in the housing market this summer (july-september): there is deceleration in the downward trend in prices and sales.
recall that the case-shiller for march was “only” at around 120, and projecting the slope at that time would put it very close to 100 at the start of june. it has all summer to go even lower.
before inventory and prices can be accurately assessed, issues with mortgage credit need to be evaluated. a lot of the “buyer resistance” is actually bank resistance. but the past 20 years have created an absurd level of excess wealth on the planet, a huge chunk of it still in cash; that remains the center of gravity in all scenarios.
May 27th, 2009 at 11:26 am
California is light years ahead of spending on students compared with Mississippi…and hospitals…
http://empirezone.blogs.nytimes.com/2007/05/24/the-highest-per-pupil-spending-in-the-us/
Franklin…you are hopeless. Maybe the word is hapless…
May 27th, 2009 at 11:30 am
@thatguy: Many thanks for the heads up. This mortgage re-fi biz is quite the racket. Fits with our “service economy”. Creating labrynthe-like processes/inscrutable paperwork and then skim as much cream off for yourself along the gravy train seems to make up a good chunk of our economy these days. Wonderful.
May 27th, 2009 at 11:34 am
Any notion how much shadow inventory is out there? I seem to recall 600K units?
May 27th, 2009 at 11:36 am
Altnerate State revenue sources — but there are no “quotas” in ticketing. Yeah right:
http://www.bostonherald.com/news/regional/view/2009_05_27_Staties_slap_drivers__filling_Pike_s_coffers:_Getting_up_to_speed/srvc=home&position=0
Also, anecdotally, I’ve seen several large training groups of new meter maids/men the last few weeks around Boston. Ka-ching, ka-ching.
May 27th, 2009 at 11:37 am
LB once attended a Victorian-era schoolhouse where class size was 45. Outside toilets, no gym, no place to eat.
Quite a few of that class subsequently graduated from university. Discipline was tough, expectations were high.
Although facilities have improved since 1969, the social standing of teachers has fallen, and this is significant.
When the world becomes all about making money, the quality of things not measured in financial terms declines.
May 27th, 2009 at 11:37 am
Is it me or are they trying to hold up the market until the 5 yr note auction?
I still have yet to hear anyone in the MSM respond to President Obama’s comment in his interview with cspan.
May 27th, 2009 at 11:41 am
leftback said: “Although facilities have improved since 1969, the social standing of teachers has fallen, and this is significant.
When the world becomes all about making money, the quality of things not measured in financial terms declines.”
Well said. Again, this comes back to culture. Very difficult to “fix”.
May 27th, 2009 at 11:42 am
@ahab 11:09
Glad you got that. It was a nod to a clusty link MEH posted about a week ago.
May 27th, 2009 at 11:46 am
@LB 11:37
“When the world becomes all about making money, the quality of things not measured in financial terms declines.”
Seconded. This explains most of our problems today, both here and abroad.
May 27th, 2009 at 11:49 am
Wunsacon says:,
Folks, go easy on Franklin411. He’s the only contrarian here.
This statement is not even true. Franklin is now basically in the consensus. To his credit, he never said we were going to turn around right now, he is just constantly discussing the green shoots and using a lot of very weak data, public figures comments, and emotional argument to prove his point, much like wall street economists are talking more and more about a second half recovery. This is slowly becoming the more accepted view in case you missed it.
This of course was all so very predicable just a few months ago.
Soon enough he won’t be the minority, he will be in the clear majority. In the meantime I can pick apart what he says just like he can do the same about what I say. Nobody should take anything very personal on the net, it’s just a bunch of opinions.
May 27th, 2009 at 12:23 pm
On the plus side “only 305″ troubled banks, and none are named Citi or Bank of America
magic
http://is.gd/H2pF
May 27th, 2009 at 12:39 pm
[...] But really year over year numbers matter: Existing-home Sales Fall 3.5% [...]
May 27th, 2009 at 12:56 pm
Month Inventory is easy. Its ETSLMSUP on BB
May 27th, 2009 at 1:59 pm
@Franklin411:
You are right, we need to get back to actually creating something of substance. However, college educated people don’t want to work in manufacturing (at least the menial part of it). Less educated people won’t “stupe” to doing the work for low pay. Also, a more efficient manufacturing process means less people involved/employed. We could try the old Soviet system of keeping old, labor intensive factories employing thousands, but that only worked with government ownership (and only for a limted amount of time). So I’m not sure what path that leaves us. Perhaps a buildup of skilled trades and a government mandate for planned obsolescence (all plumbing must be replaced every 50 years, all electric needs to be rewired every 30 years, etc). Education by itself is not going to solve unemployment. Without focus, we will just have more economists and financial analysts. Without employment, we will not have a sustainable recovery.
Now back to your regularly scheduled programming…
May 27th, 2009 at 3:09 pm
“sales of homes priced above $750,000 have collapsed”
And Olick reported today that existing homes in this category are at a 40 month supply.
May 27th, 2009 at 6:48 pm
@Franklin411
WHOA…I wasn’t involved here today because I was engaged in FAMILY matters (which are the only things that REALLY count)…
But it’s actually a GOOD THING :-)…
I think I may just rest my pen for awhile because it appears that you’ve taken on a significant amount of body blows…
May 27th, 2009 at 9:18 pm
>> Signed, Franklin’s Mother
LOL!! Transor.