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Home Sales Soar by Record Amount . . . Are you kidding me?User Forum Topic
Submitted by BobbyD on May 24, 2007 - 8:17am
What a joke, who is paying these guys, the BHIA? AP WASHINGTON (AP) -- Sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home dropped by the largest amount on record. The mixed signals left no clear picture of whether the worst of the nation's housing slump is over. The Commerce Department reported that sales of new single-family homes jumped by 16.2 percent in April to a seasonally adjusted annual rate of 981,000 units. That was far better than the tiny 0.2 percent gain that economists had been expecting. However, the median price of a new home sold last month fell to $229,100, a record 11.1 percent decline from the previous month. The big price decline indicated that builders are slashing prices in an effort to move a huge overhang of unsold homes. The jump in sales was the biggest increase since a 16.4 percent surge in new home sales that occurred in April 1993. However, analysts cautioned against reading too much into the big gain, especially in light of other surveys showing that builder confidence has sunk in recent months over worries that troubles in the subprime mortgage market will further crimp demand in coming months. There was also concern because all of the strength in sales came in one region of the country, the Northeast, which saw a surge of 43.1 percent. Sales were down 28.1 percent in the Midwest and 25.4 percent in the West. Sales fell a smaller 3.4 percent in the South. The drop in median prices in April compared to March was a record one-month decline. If the April sales price was compared to the sales price a year ago, the decline was 10.9 percent, the biggest year-over-year drop since 1970. In other economic news, the Commerce Department said that orders to U.S. factories for big-ticket manufactured goods posted a moderate 0.6 percent increase in April, helped by a continued rebound in business investment. In a third report, the Labor Department said that the number of newly laid off workers filing applications for unemployment benefits rose to 311,000 last week, an increase of 15,000. But even with the gain, claims remain at a level indicating a healthy labor market. While the increase in orders for durable goods was less than had been expected, the government sharply revised the March performance to show a 5 percent surge, much stronger than the 3.7 percent gain previously reported. Analysts believe that U.S. factories, which have been buffeted by the weakness in housing and slumping demand for autos, are starting to stage a moderate rebound, helped by reviving interest on the part of businesses to spend money to expand and modernize. The overall economy slowed in the first three months of this year to an annual growth rate of just 1.3 percent, the weakest performance in four years, as a steep slump in housing continued to weigh on the economy's performance. Analysts are hoping that spending by consumers and businesses will be able to overcome the weakness in housing and keep the country out of a recession. The report on durable goods offered encouragement in the area of business investment. It showed that demand for capital goods excluding airplanes, considered a good proxy for business investment, rose by 1.2 percent in April following, the second solid monthly increase. The 0.6 percent rise in total durable goods orders came even though demand for transportation products fell by 1.3 percent. This reflected a drop of 10.7 percent in demand for commercial aircraft and a 1.9 percent fall in orders for motor vehicles. Excluding transportation, orders would have been up by 1.5 percent, the same performance as in March. There was strength in orders for primary metals such as steel which rose by 4.3 percent and orders for electronic equipment and appliances, which rose by 3.8 percent. But demand was weak for computers, which fell by 7.8 percent, and communications equipment, which dropped 5 percent.
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What irks me is the median of $229,100. The sad part is this median is only over $200k because of California and NY. I'd hate to see what the national median home price would be without NYC/Man or Cali. It would probably be under $100k.
Nor_LA-Temcu-SD-Guy
I think it was still below April 2006 sales and lowest April Sales since 2003, that being said,
What would happen if the Builders reset the prices back to 2003/early 2004 in a few months time frame and then resume more normal price appreciation 5% to 8% a year.
This I think would be in everyone best interest,
Not likely I know but seeing what the builders have been doing in Riverside and SCV the last few weeks hmmm Maybe ???
Maybe this is what is happening ???
Just a weird report. Up 45% in the NE, down 28% in the MW, down 25% in the W? The median fell 11%? Doesn't it seem those numbers are an order of magnitude off from reasonable m-o-m numbers?
The big red headline on Drudge early this morning said FIRE SALES.
Of course he moves things off the main headline throughout the day, and that story is now at the top left.
This is really getting to be a confusing situation. It appears the primary activity were low end home sales in the south. I have family that lives in Kentucky and I visited earlier this year. Home prices are not disconnected from fundamentals there. In fact you could probably sale a high end home in California and buy a good chunk of the state of Kentucky. Interest rates are still historically low so I can see how activity would increase in these areas. Such is not the case in the bubble markets as we all know. The bulls here in California are on their knees praying for a rate cut. That just got put off with today's report. It appears we are now heading into the brunt of the ARM Reset / foreclosure storm with mortgage rates going up not down. IMO this is very bad news for California RE. The FED remains in a very tight spot. There are actually rumblings of further rate hikes. This is a worst case scenario for the state of California. Job growth is anemic, retail sales (auto), are down, net out migration of monied population, more college grads leaving than coming in, escalating NOD's and foreclosures, falling home prices and no relief in sight. Will California be the sacrificial lamb before the FED can step to the plate?? It's starting to look like that everyday.
What chants do I have to chant and dances do I have to do during the sacrifice? I have my torch lit and my war paint on, I want to do some dancing.
Looks like the regional numbers were misreported at first.
Here are the new numbers:
The strength in sales was led by a 27.8 percent surge in the South. Sales were also up in the West by 8.5 percent and in the Northeast, where they rose 3.8 percent.
Sales fell in the Midwest, dropping by 4 percent.
That's more sane, I guess. I'd love to know how the numbers broke down on a state-by-state basis in the "South"
Key words:
"in April"
"April compared to March"
"new home"
Month to month is meaningless, we all know that, and new homes are a fraction of sales. Sales appear up because last month was horrendous, and prices are down. Look at prices/sales from a year ago and I'll bet it's a different story.
These guys only hear what they want to hear anyway, this is from MSN:
"At least one analyst took a glass-half-full view. "The report (on new-home sales) starts to seal the argument that the housing market is beginning to stabilize, at least in terms of demand," Richard DeKaser, the chief economist for National City, told Bloomberg News.
Right...that of course is dependent on the pipe dream:
"Analysts are hoping that spending by consumers and businesses will be able to overcome the weakness in housing and keep the country out of a recession."
Problem is people have no more money, no more equity, no more savings.
It's over. These people just refuse to accept it.
Ostriches.
I don't think it is that big of a deal to get worked up over. The media is always going to misrepresent the situation regardless of whether it is housing, the war, pretty much anything.
We all know what is really going to happen. It is just going to run it's course in due time.
SD Realtor
New home sales stats are a joke because what is counted as a sale is when someone makes their initial agreement and deposit. It does not take into account that many of the buyers will not follow through with their purchase. With cancellations running as high as ~35%, the stats are meaningless.
Builders slashed prices to move inventory. Buyers, faced with the choice of a resale home, or a new home at a lower price, "shockingly" chose the new homes.
To me the key takeaway is the slashing of prices, not the increase in sales. A decrease in price is expected to yield an increase in demand by the laws of economics.
Calculated Risk notes that March sales looked encouraging too but were then revised downward. Quite a bit downward.
Anyway it's nice to read some thoughtful discussion of the new home sales numbers rather than the monthly "these numbers are stupid and useless, why do we even report them" post that appears on another prominent housing blog :)
Uh, this is good right? I.e., it takes increasing sales w/decreasing prices to accelerate the correction?
I would think once folks see that in order to move inventory they have to make steep reductions for the effect to snowball until it bottoms out.
Sales are up on a month to month basis, but sales of new homes are still down 11% YOY. The headline is, of course, highly misleading.
"WASHINGTON (AP) -- Sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home dropped by the largest amount on record. The mixed signals left no clear picture of whether the worst of the nation's housing slump is over."
The only mixed signals are deliberate and coming from the press.