New Home Sales Rebound! (Sales drop 23.5%; Prices fell 13%)

Yesterday morning, Commerce released the New Residential Sales data.

Encouragingly, the media has caught on to the monthly nonsense built into the way numbers get reported, as evidenced by this WSJ headline:  New-Home Sales Post Modest Gain Because Prior Months Revised Down

As we noted same time last month on "No, New Homes Sales DID NOT Rise . . .", the game is to report the present UNREVISED latest data versus the revised lower last month’s data.

Example: September 2007 sales of new one-family houses were initially reported at 770,000, up 4.8% from the prior months downward revision of 735,000.

As we warned, that phantom 4.8% gain was likely to disappear when the revisions get reported: Surprise! September got revised down to 716,000 — that swung the monthly numbers to a loss of 2.6%. Not very astonishing — all you need to do is read the data and do the math.

For the latest month of data, we see the same pattern emerge:

- The year-over-year change from October 2006 is minus 23.5%; (The statistically significant margin of error was ±10.3%).

- The median sales price of new houses sold in
October 2007 dropped 13% to
$217,800 — a significant drop from October 2006 price of $250,400;
(average sales price dropped exactly $1,000 o $305,800). Monthg to
month, prices fell

- Initial number of for new one-family houses sold October 2007 was 728,000 — this will likely be revised downwards, also winging it to a loss.

- The fractional initial unrevised gain of 1.7% has a margin of error of ±11.0%, and therefore is not statistically significant.

- Inventory improved, falling 6.7%, representing an 8.5 month supply at the current sales rate.

NOTE: New Home Sales are a measure of contract signings, and do not reflect cancellation rates, which remain significantly elevated in the 20-40% range.


While Homebuilders have been doing what they can to cut inventory levels, the problem they face is competition from existing
homes for sale — which make up more than 80% of total Homes for sale inventory.

Chart courtesy of Barron’s and Econoday


Commerce Dept, Novermber 29, 2007

New-Home Sales Post Modest Gain Because Prior Months Revised Down
WSJ, November 29, 2007 10:27 a.m.

Category: Data Analysis, Economy, Real Estate

iPod, Sansa, Zune

Category: Digital Media, Technology, Web/Tech

Hollywood Studio Exec Explains The Writers’ Strike

Category: Digital Media, Film, Television

Combined Value of Leading Credit Sources

Category: Credit, Derivatives, Finance, Financial Press, Technical Analysis

No Conspiracy Theory — Just Data

Category: Data Analysis, Psychology, Taxes and Policy

GDP=4.9% (also, I have a bridge for sale in Brooklyn)

Category: Consumer Spending, Data Analysis, Economy, Inflation, Psychology

Inflation? What Inflation?

A tale of two headlines:

Inflation Fears Hit Eurozone


Goldman Sees Funds Rate Cut to 3%

Won’t someone please explain this to me?

How is it possible that the regions of the world with strong currencies — like Europe, U.K., Australia, and Canada — are having inflation problems. And yet at the same time, the nation having a record low currency — i.e., the United States and our Dollar — doesn’t seem to either inflationary pressures (At least according to official CPI data). And we seem to have little concern about further currency induced price increases.

Am I the only person who finds this incongruent?

If Goldman Sachs is correct, and the Fed does eventually cut rates to 3% — what might that mean for various dollar priced commodities like Oil & Gold?

Probably very little — if (and this is a big IF) we are in the throes of a recession. But what if the Bulls are right, and this is merely a mild mid cycle correction?

A 3% Fed rate could mean Oil at $150 and Gold at $1200.

Excerpts after the jump . . .



Inflation fears hit eurozone

By Ralph Atkins in Frankfurt and Krishna Guha in Washington
FT, November 27 2007 18:02

Goldman Sees Funds Rate Cut to 3%
Greg Ip
WSJ, November 27, 2007, 9:26 am


Read More

Category: Commodities, Credit, Derivatives, Economy, Energy, Inflation

Internet Radio Slowly Closing Down

Category: Digital Media, Music

Unusual eBay Warning

Category: Digital Media

Market’s Back-to-Back Streak

Category: Contrary Indicators, Investing, Markets, Trading