Posted on 11/20/2006 9:47:58 PM PST by GodGunsGuts
AP Home Sales Plummet in 38 States in 3Q
Monday November 20
By Lauren Villagran, AP Business Writer
Third-Quarter Home Sales Plummet in 38 States During the Summer; Home Prices Also Tumble
NEW YORK (AP) -- The feeble U.S. housing market showed more frailty when third-quarter home sales plummeted in 38 states, hitting Nevada, Arizona, Florida and California particularly hard, government data showed on Monday.
The once-booming real estate market's persistent weakness over the past year has reined in expectations for economic growth but hasn't been severe enough to offset a rising stock market, lower gas prices and improved consumer expectations.
The National Association of Realtors reported Monday that sales of existing homes fell in 38 states during the summer. Sales retreated to a seasonally adjusted annual rate of 6.27 million units nationwide, down by 12.7 percent from the same period a year ago. Nevada, Arizona, Florida and California led the declines.
Home prices also dropped: The realtors' survey showed that the midpoint price for an existing home sold during the summer dipped 1.2 percent year over year to $224,900. Some 45 metropolitan areas saw home prices decline.
Meanwhile, the latest report of building permits showed the slowest pace of annual growth in nine years in October. Housing construction slid sharply as builders tried to curb swelling inventories of unsold new and existing homes.
Stuart Hoffman, chief economist at PNC Financial Services Group, said he thinks the housing market still hasn't reached its low point.
"I think the permits numbers point to yet another flight of stairs down on housing before we hit the basement," he said. "On the other side, stocks are rising, consumer confidence is good and jobs are rising. Those factors are keeping this decline in housing contained."
A closely watched indicator of future economic activity release Monday provided further evidence of that trend.
The Conference Board, an industry-backed research group based in New York, reported Monday that its Index of Leading Economic Indicators rose 0.2 percent in October. Increased real money supply and improved consumer expectations helped offset the sharp decline in housing permits and weaker vendor performance.
"The economy is growing more slowly, but we have yet to have weakness spread beyond housing and motor vehicles to such a degree that we need to fear the proximity of a hard landing," said John Lonski, chief economist of Moody's Investor Service, referring to when the economy turns from growth to a recession.
The housing market slowdown has weighed on the leading indicators index this year. But all told, strengths and weaknesses in the leading indicators have been roughly balanced, according to the Conference Board report. The index stood at 138.3 versus 139.1 in January -- its peak so far this year. The index has declined four of the last seven months.
The Conference Board's labor economist, Ken Goldstein, said the October index suggests "the economy is unlikely either to reheat or to get significantly cooler."
"Instead, the kind of slow growth now being experienced could continue right through the winter and into the spring," Goldstein said.
In another sign of moderating economic growth, the Federal Reserve held its benchmark interest rate steady last month at 5.25 percent for the third straight session. The Fed had raised interest rates 17 times beginning in June 2004 to stave off inflation, before halting its campaign of credit-tightening in August.
There won't be inflation if housing prices fall.
I know very well what it means. It means the economy will suck and my gold will go to the moon.
"because secondary market aggregators have found plenty of naive capital, 'yield hogs', willing to buy the toxic waste (speculative grade mortgage bonds) that must be sold in order to make most of the bonds backed by mortgage pools with heavy doses of such crappy loans palatable to "investment grade" lenders. Over the next few years, these "yield hog" will be retching up their gains, and lose quite a few pounds in the process."
'With a single law change mandating that holders of notes notify home-owners that their own home's mortgage is being sold at a discount, and a provision that the home-owner has the right to strip that note from a Pooled package and buy it, an entirely new buyer can be introduced into the Market.'
A clever idea, which I would expect to raise no serious secondary market aggregator objections (other than the usual lame "we've nevah done it that way before!" stuff), because they would never have to report, until they liquidate the whole pool, since before that they would never offer individual loans for sale, only bonds based on participations in intricately defined cash flows from the entire pool. At the point that the pool is liquidated (typically when 10% or less of the outstanding principle balance is left) they might be happy to sell the loan back to the borrower at a discount of some sort, and probably would be able to get a better yield at that point. So, I think they would say, "Brother borrower rep, please don't throw us into that briar patch! We're really terrified! Do anything you want to us, but that!" And then roll over when it came up for a vote.
Actually, if you want to track it down, something like what you suggest is SOP in one of the small European markets. Holland, I think, or maybe Denmark. Send a note to your congress critter. They love to have "win win" proposals that will keep their campaign donations flowing from the aggregators, and make borrowers happy.
LOL
Actually, I'm of the opinion that we are really experiencing a credit bubble, just as you say. Nice to see there are those on FR who have caught on to the real culprit.
Houses aren't stocks or commodities like pork bellies.
We had terrible stagflation, under Carter. Where was gold? :-)
Houses aren't stocks or commodities like pork bellies.
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Before I respond. It would be good if you could post my comment you are responding to on your post. I have posted more than one comment (4 to be exact) on this thread. When you answer a post without letting me know what comment you are responding to, I just have to guess at a response.
So here goes. Obviously the above mentioned items aren't exactly the same. They do however have some similar characteristics. Housing can be an investment as can the other two. It can be highly leveraged as can stock options, and commodities futures. And all three are dependent on the broader economic health of the country for their appreciation. The main important difference in housing is that the owner occupied housing market has more intrinsic value as shelter and residence than for investment purposes.
Yes. Pries for art and collectibles have gone through the roof too, another indicator of too much fiat money.
For the vast majority of people, when they buy a house or co-op/condo, it's to live in; it's their HOME! To view it any other way is really stupid! Then, there are people who buy real estate to profit from; whether it's rental property, or as flippers. The latter category is a business and needs to be separated out from those who buy a "HOME". When I made my statement, I was talking about people who buy HOMES!
You can't live in an option or stock nor bond. Neither can you sell a house or an apartment at a moment's notice. And sometimes one is hot, when the other isn't. Real estate doesn't always track other markets; though some of the time it does.
I think that we might be closer to each other, in this, than either of us thought, at first blush. LOL
Fiddling while someone is about to put the match to Rome.
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