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Home prices fell less than they had been in August, according to Case Shiller. The Index shows a 7th consecutive months of improved readings in these statistics, beginning in early 2009.

By improved, prices continue to slide year over year, but at a slower rate. Monthly prices show modest gains.

Year over year, the 10-City and 20-City Composite Home Price Indices declined 10.6% and 11.3%, respectively, in August. The indices gained 1.3% and 1.2% from July.

Note that Goldman Sachs estimates that the US Government interventions and bailouts have pushed housing prices 5% higher.

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Other charts after the jump.

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David Rosenberg is a 20 year veteran of the Street, David most recently was Merrill Lynch’s chief North American Economist, where he correctly warned about the Housing and Credit Collapse and Recession in advance. He is the Chief Economist of Canada’s Gluskin Sheff

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What made things so interesting is that in 2007, when I was at Merrill and calling for a recession, it was such an outlier view even though it seemed so obvious to me at the time. To think that it only became a widespread consensus view in the fall of 2008 when the downturn was already in full force for a good eight months. Back then, the bears still felt they had to be vindicated, and of course, the only barometer that seems to matter to anyone was the stock market, which gave absolutely no ‘heads up’ at all for what was to come down the pike. But now, it is universally viewed that the recession is over, that a recovery has begun, and a growing number of commentators are calling for 4%+ real GDP growth for 2010. We have never been a fan of group-think, but that is what we have on our hands today.

The question really is how robust is the economy and what is the root of optimism. It comes down to the massive doses of medication that have been applied by Uncle Sam. Unless we want to sustain state capitalism, which is what we had by the way, throughout the 1930s and 1940s, then this unprecedented public sector incursion into the capital market and the economy is going to have to end at some point.

But when you have a system that continuously extends unemployment insurance, provides subsidies for cars and homes (and the latter is still being considered as an extension at a cost of over $1 billion a month for the taxpaying public) not to mention the credit-boosting initiatives by the Fed and the FHA. The Obama team is now considering a capital infusion into small businesses as a means to bolster employment in this critical part of the economy. Friday’s WSJ also suggests that the Democrats are mulling over tax credits for “additional big ticket items.” Yes, that is true. Despite all the fraud involved in the homebuyer tax credit plan, its extension and indeed expansion is not being discussed in Congress. (100,000 improper claims for the tax credit? Who cares? It’s for a good cause.)

All of this (you have to see the Tim Geithner interview in BusinessWeek) is not being dubbed another fiscal plan — it is only an “extension” of the first. At the same time, we have a system where all the big banks have been safeguarded by the government and the liabilities of the entire system guaranteed by the taxpayer. Deficits continue to be racked up — $1.4 trillion in the past year and over $1 trillion as far as the eye can see and we are still being told that this all the fault of the prior Administration. The question that has to be asked is, while the coupon payments will be made, do the entities who are buying U.S. Treasuries today really ever expect to get their capital back? Without either deep spending cuts or tax increases (a dirty three-letter word in the U.S.A. — remember Bush Sr.’s “read my lips” back in the early 90s that cost him the election?) the only way out of this fiscal mess caused perhaps by the prior Administration and now accentuated by the current Administration will be by monetizing the debt.

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The Aug 20 city S&P/Case-Shiller home price index fell 11.32% y/o/y, a touch less than the expected drop of 11.9%. It’s the smallest y/o/y decline since Jan ’08. On a m/o/m basis it was up 1.18% where 17 of the 20 cities saw prices gains with Las Vegas, Charlotte and Cleveland down. Every city is still seeing y/o/y price declines with the overall decline from the record highs now 32.6%. This data is not seasonally adjusted and thus an August measure m/o/m benefits from the spring/summer selling season and the home buying tax credit. With that said, the seasonally adjusted price gain m/o/m was .97%, with the tax credit helping to bring out multiple price wars for foreclosed homes, particularly in California according to Case-Shiller. In summary, “As of Aug ’09, average home prices across the US are at similar levels to where they were in the autumn of ’03.”

Add the Reserve Bank of India to the list of central banks that are moving to take away their extraordinary accommodation. They did not raise interest rates but increased the bank liquidity ratio, which is basically a reserve requirement, thus forcing banks to have a higher % of their capital in gov’t bonds which thus reduces the availability of money that can be lent out. They said they want to reverse the ‘unconventional’ measures but keep the ‘conventional’ ones. This thought is similar to the RBA. Asian stock markets are down in response with the Sensex specifically down more than 2% but their weakness also follows the US selloff. Norway is expected to raise rates 25 bps tomorrow. The Yuan quietly is falling to the lowest level in almost 2 months vs the US$ and is putting pressure on other Asian countries who compete with China. Case/Shiller HPI and Consumer Confidence are out today as is a 2 yr note auction.

Later this morning, the Case Shiller Index gets released. In the meanwhile, let’s take a closer look at the breakdown of home sales by price. It is rather instructive as to the state of both the housing and credit markets:

This is a relatively new NAR data series, started several months ago. There’s no readily available history I was able to locate (anyone?). They don’t provide a data series I could see, so I had to cull the numbers from the Economists’ Commentary on their website. (No specific methodology details are given).

Regardless, what I was able to pull together (with the help of a friend) was shocking. In September 2009, single family home sale prices look like this:

21% less than $100k
49% $100K to $250k
22% $250 to $500K
5.6% $500k to $750K
1.3% $750k to $1m
1.3% $1M and up

Less than 10% of the homes sold in the US were > $500k. We know the high end has collapsed, but we are not disucssing multi-million dollar homes, mind you, but over $500k as a mere 8.2% of sales. I was surprised. (I wish we had data going back decades, which we could then normalize for inflation).

In September, 70% of transacted homes were priced under $250,000.

Check out the year-over-year growth rates — also astonishing:

Homes under $100k are up 22.5%
$100-$250 +6%
$250-$500 -5.2%
$500k-$750 +4.0%
$750-$1m -2.6%
$1M up -1.2%

In the West, home sales under $100k are up 116% in the past year. And total US SF is up 6.4% y-o-y.

Amazing stuff . . .

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Source:
Existing Home Sales in September
Lawrence Yun, Chief Economist
NAR, October 23, 2009

http://www.realtor.org/research/economists_outlook/commentaries/ehs1009

I meant to get to this last week, but the day it came out, I was mostly drunk (my bday), and I somehow missed it:

“Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years.

The Wall Street Journal’s quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the next few years.

Sales of those homes may depress prices further. By contrast, metro areas with relatively low foreclosure and mortgage-delinquency rates include Boston, Denver, Minneapolis, San Francisco, Seattle, Raleigh, N.C., and Portland, Ore., making them less vulnerable.

Homeowners and potential buyers have been whipsawed by conflicting signals about the state of the market in recent months. Ulani and Mike Thiessen found the market surprisingly hot when they went shopping for their first home in Las Vegas during the summer. With the help of Kim Kelly-Reed, an agent from One Source Realty & Management, the Thiessens finally bought a foreclosed house in September for about $136,000—but only after being outbid on three other houses.”

And of course, the chart:

chart courtesy of WSJ

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Source:
Waiting for the Next McMansion to Drop
JAMES R. HAGERTY
WSJ, OCTOBER 22, 2009

http://online.wsj.com/article/SB10001424052748703816204574487240805281318.html

The latest info is out on the state of Newspapers in the USA (via WSJ), and it aint pretty:

“Circulation at many of the largest U.S. newspapers slid sharply during the six months ended in September, a sign of deepening trouble for the industry and of publishers’ efforts to shed unprofitable readers.

Weekday circulation for 379 U.S. dailies dropped 10.6%, based on a cumulative average for the six months ended Sept. 30 compared to a year earlier. It was the sharpest falloff in more than a decade.”

The Audit Bureau of Circulations report noted the Wall Street Journal overtook USA Today as the country’s largest newspaper by weekday circulation. The Journal sold an average of 2.02 million copies and online subscriptions during the six months ended Sept. 30, a slight 0.6% increase from the same period in 2008.  (UPDATE: The Journal’s gains were primarily online)

Gannett Co.’s USA Today’s average weekday circulation slipped 17% to 1.9 million during the same period. Other big falls:  San Francisco Chronicle (Hearst Corp) dropped 26%, and the NJ Star-Ledger (Advance Publications) fell 22%.

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Ouch!

Sources WSJ, Audit Bureau of Circulations

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UPDATE: October 27, 2009 5:54am

Jake gives us the chart to go with the data:

Its Monday, and that means y’all has gots some readin to do:

• Economists Push Employer Tax Break For New Hiring (NPR)

• Andy Xie: Insight: Is China due a reality check? (FT)

• Improving Business Conditions, with Pickup in Hiring and Capital Spending Planned over Next Six Months (NABE)

• Shipping News May Signal More Reality (WSJ)

• Language Lessons at the Fed (Barron’s)

• Record NYC real estate deal now on the rocks (AP)

• Healthcare system wastes up to $800 billion a year (Reuters)

• Seven questions that keep physicists up at night (New Scientist)

• Fall Back: Europe Moves to Winter Time, U.S. Changes Clocks Next Weekend (Basex)

• Herd Mentality (Daring Fireball)

What are you reading?

U2 and YouTube broadcast the Irish rock band’s Pasadena concert live last night, for free. And, its now on YouTube.

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From: U2official | October 26, 2009 | 310 views
The world’s greatest band on the world’s largest stage – U2 on YouTube. Watch the rebroadcast of the full live streaming performance from the Rose Bowl. Recorded on Sunday, October 25th.

Hat tip GMSV