Posted on 05/27/2008 7:24:24 AM PDT by DaveLoneRanger
Sales of new homes rose in April for the first time in six months although the unexpected increase still left activity near the lowest level in 17 years.
The Commerce Department reported Tuesday that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units.
But the government revised March activity lower to show an even bigger drop of 11 percent to an annual rate of 509,000, which was the weakest pace for sales since April 1991. Economists believe that new home sales will remain weak for some time as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.
The Commerce report showed that the median price of a new home sold in April dropped to $246,100 in April, down 4.2 percent from April 2007.
A separate report showed home prices falling during the first three months of this year at the sharpest rate in two decades. The Standard & Poor's/Case-Shiller index fell 14.1 percent in the first quarter compared with a year earlier, the biggest year-over-year decline since the index began in 1988.
The Commerce report on new home sales showed the April rebound was led by a huge 41.7 percent surge in sales in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. The only region which saw a decline in sales in April was the South, where sales fell by 2.4 percent.
And where are most of the conservatives in this country? Oh yeah, the “south”, where we (for the most part) save instead of spend. We’ll all be sitting pretty when the !@#$ finally hits the fan and everyone will be screaming at us for using our oil to avoid financial ruin. It’s going to be beautiful.
I wonder if an editor can write a headline about economic statistics that does not include the word “unexpected” when the news is positive? It seems to be a tic that they have, or a poker tell of their inherent anti-Bush admin ideology.
So, we’re NOT doomed? ;)
I don’t know what I could have said to give you THAT idea!
I’d say that outside of Florida and possibly the Atlanta metro, the southeast didn’t have the huge drop in sales that other regions had, and it’s been more of a slow decline that is still ongoing. But, month over month declining sales, in the spring-summer selling season, is not a good sign, no matter how it’s presented. It’s expected, not unexpected, for sales to increase from March to April. People choose to put their homes on the market during this time frame, because it’s historically been the best time to do so.
Gloom and doom, the Sky is Falling.
Home prices are dropping, and builders and lenders are getting desperate. So shoppers are out looking for bargains. The market will right itself eventually.
I live in NJ and these numbers support what i have been seeing in the community i live in. For the first time in 2 years the developer (Lennar) is gain building spec homes and they are selling very well, albeit with discounts. At the peak (for the buyer, not the seller), the discount was in the area of 15%, today they are discounting about 7%. Despite what this story tries to do as far as minimizing it's importance by saying last months figures were revised downward, it really doesn't matter because the trend is what is important and not last months news. As soon as people realize, as seems to be happening now, that to sell their homes so they may buy a new one, they must get to a price a buyer is willing to pay, the sooner the housing sector will first stabilize and then expand.
Housing market push-ups. Up, down, up, down...........
Unless you're talking about in-house lending with the large builders, you're not going to find an aggressive deal on a mortgage. Rates are good, historically speaking, but underwriting standards have been tightened considerably. If a buyer has good, solid, verifiable income, a credit score above 720 and a decent down payment, they're good to go. If they don't, they're going to have to really work to find financing, and they won't be getting such a good interest rate.
Forbes has Oklahoma listed as one of the top states that is recession proof right now. Our home prices rose 1-2% a year over the past 10 years so homes are still affordable in OK and in the city I live home sales are not that far off from past years.
When home prices rose in some areas like FL to such high levels, sooner or later they were going to fall. Cannot believe how much people paid for such small homes in parts of FL. Not worth the money.
I think it’s year-to-year numbers they are presenting, not month-to-month.
It shouldn’t be unexpected at all. Prices have plunged and interest rates are still at historic lows.
It is a great time to buy a house. I’m not so sure it’s a great time to build — I’m betting every variety of building supply has gone up. To build a decent home probably costs 125 - 150 a square foot in the midwest.
I’d say you’re correct. A lot of people list their homes this time of year because the school year is ending. They already planned to move but wanted to wait until their kids finished the current school year.
BTW, based purely on my anecdotal observations and not any stats, the Houston market also seems to have escaped the big drop.
MM (on extended sabbatical to Texas)
With a 620, no derogatory credit items in the last 1-2 years, and solid income, you can still get a decent rate on an FHA loan. In fact, a bit better than conventional at the moment.
There goes the MSM “talking up” the economy once again. No mention of the 42% year-over-year decline, which is terrible. If our paychecks went up 1.7% from March but was down 42% from last April, we would be screaming bloody murder.
The fact is,house sales for April 2008 were down 42% year-over-year and the 2nd worse April sales since 1991. How anybody can see that as good news is beyond me.
That sales were up a tad from March strikes me as nothing but normal seasonal behavior. April sales are almost always up from March. I’m sure there will be a parade of posts that the “bottom is in”. Right, after a 42% decline year over year.
I’m sure most Realtors and RE brokers understand the full effect of a 42% year-over-year decline in sales and I’m sure they aren’t calling that good news.
Bull. According to an A.G. Edwards report, the five states with the highest savings rates are New Jersey, Connecticut, Minnesota, New Hampshire and Massachusetts. The five states with the lowest savings rates are Mississppi, Louisiana, Arkansas, Oklahoma and Alabama.
We bought two in our family in April.
“There you go again Freedom...” This time I think I’ll just say good luck in your house hunting....and remember In order to have a rising market, you start with a bottom! I know you’re looking at existing homes, and this news was about new homes. But to be honest, I wouldn’t wait 5 years for the bottom in existing homes either!
The "Nest Egg Index" you linked has little to do with savings and is mostly about investments.
The "Personal Savings Rate" which deal strictly with savings has been running in the negatives since 2005.
I can’t wait 5 years for a house. Not only do I expect the bottom come in within the next 2 years, but I expect mortgage rates to be in the double-digits in 5 years.
Bernanke is trying to inflate like heck. We are seeing it in commodities (along with a speculative bubble brought on by another round of almost free borrowing).
I expect inflation to kick in hard and the FED will have to really jack up rates. What good would it do for me to wait 5 years and have to pay 10.5% on a mortgage. I’ll be buying within 2 years.
If the other very possible scenario occurs — a decade of asset deflation ala Japan — then I will have guessed wrong on the mortgage interest rates, but at least I will have bought my asset (house) at a lower rate than today.
What I don’t expect is “business as usual”. I don’t expect to see a decade of low inflation, modest interest rates, modest increases in asset prices. I think we are heading to another round of 70s style inflation. I am going to want to be in a house with a 6% loan before that happens.
FWIW, if I find a good deal on a house this winter, I’ll buy. If not, then the year after.
They’re being bought up by illegals, getting their loans from Bank of America.....
If government took as much time to get their fingers into taking care of the slump in housing as they are taking in building a border fence, the market would take care of it in no time on it's own.
We recently put our home on the market, $409,000. We hope it sells sooner than later, but we are having some doubts.
Santa Fe Conservative:
I just put my home on the market, too, due to a relocation. I am in Maryland and I had to list much lower than I bought and still couldn’t get anyone interested. Our house is uncluttered, clean, grass kept up, etc. We are in Maryland and are moving to Texas. We have seen no houses sell in our area for a long time.
This report only shows signed contracts, but many of these
contracts do not get financed!
Economists believe that new home sales will remain weak for some time as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.Of course, interest rates fell again, which means lots of foreclosures are actually being refinanced (the hard way). Thanks Dave for the topic, and thanks OPEC et al for destroying the world economy with high and ever-rising crude prices.
The only financial news I heard reported today was that “consumer confidence” has reached a new low.
Don’t get me started....
“Home sales post unexpected April increase.”
Just a dead-cat bounce. The trend is downward and will remain so until prices drop very significantly.
If it means anything, my agent in Southeast Tennessee noted that sales were up in the last few weeks as well. I'd like to see them rise in Northern Ohio where I have great interest in the market at this time.
The article, not you, Dave. :)
Just wait an hour or so...the sky will start falling again.
It’s hard to keep up from day to day. ;)
Gee, the housing market goes up, down, and then up. Just like average temperatures. The only reason that this is news to liberals is because they are so incredibly and shockingly ignorant and naive. I wouldn’t trust a liberal to polish my shoes, let alone run the government.
I expected this increase. The sperts never expect anything positive.
In Charlotte, we’ve not experienced housing drops.
Unexpected? Not likely with prices falling and so many people desperate to unload, prices are bound to fall. Sheesh.
Investments = savings that grow.
NOT including investments in savings is intellectually dishonest.
The comparisons aren’t between different seasons. The comparisons are between April of one year and April the previous year, March of one year and March the previous year. The numbers probably lie (what government “statistics” don’t?), but the seasonal problem you cited isn’t relevant.
No. Investments = savings that CAN grown, they can also decline as we have seen in the current housing market. They can also totally disappear when companies discontinue pensions as we have seen so many times recently. or if the stock markets should go south.
NOT including investments in savings is intellectually dishonest.
No. Including saving investments is intellectually dishonest. That is why the Fed who puts out the "Savings Rate" has never included investments in the 70+ years they have been doing it. It is also why the report put out by AG Edwards is called the "Nest Egg Index" and not a savings index.
OK, but showing a negative savings rate to act as if Americans as a whole have not a pot to piss in is NOT correct, even if their money is tied up elsewhere.
The negative savings rate may be the best thing for our country at this time.
If you say so.
I suspected as much - thanks for posting that. I don’t understand why people complain about the “high housing costs”; as long as they’re not artificially high (like they have been in the West recently), then you get all the money back eventually. I’d rather live where the wages are higher and housing is more expensive, because I end up wealthier in the long run.
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