New home sales hit record low… unexpectedly!
[Posted by Karl]
Yes, Reuters says the magic word:
Sales of newly built single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery.
Potential trouble? Really? Today’s figure is the worst since they started keeping records in 1963. As Daily Finance’s Joseph Lazarro notes:
[H]istorically, increases in home sales are strongly correlated with greater demand and an economic expansion — and decreases are linked to the opposite. However, government statisticians also caution that the new home sales figures contain a margin of error and are subject to revisions. Further, economists note that it typically takes three to five months to detect a trend, so investors should not read too much into data from one month.
Unfortunately, new home sales also dropped “unexpectedly” in December. That followed November, when new homes plunged “unexpectedly” to the lowest level since April. Indeed, new home sales have been trending downward steadily since August.
In related news, the Mortgage Bankers Association says that mortgage applications declined by a seasonally-adjusted rate of 8.5% last week. Michael Fratantoni, MBA’s Vice President of Research and Economics, attempts to place the blame on the snowpocalypse that gripped the East Coast. Similarly, the Associated Press pre-emptively blamed the weather for the latest drop in consumer confidence, which also turned out to be “unexpectedly” bad. But there were no blizzards in August, when the housing market started falling. Unemployment increased and remains persistently high. Very little of that has to do with the weather. As John Carney notes:
The story-book recovery was dependent on a recovery of the consumer and a decline in the saving rate. If consumers lost some of their apprehension about future income prospects and future employment, they might begin to spend more on both retail goods and to purchase homes again. Anticipating this return of the consumer, businesses would increase capital spending and inventory.
We got the last part, but not the first part, raising the possibility that the recovery on the business side will falter, sending the country into a double-dip recesssion. That this malaise is occurring despite the extension and expansion of the homebuyers’ tax credit suggests that Americans are casting a vote of no confidence in Obamanomics.
–Karl
from the graph it looks like sales are about 40% off their peak of last year…
so if demand is dropping then reported price increases are … inflation?
We’ll see I guess.
happyfeet (71f55e) — 2/24/2010 @ 11:04 amThis is shockingly unexpected.
JD (b537f4) — 2/24/2010 @ 11:07 amIt is unexpected, at least for those who thought Obama and Congress were making things better. For everybody else (like me, yes a plug), dropping home sales, continuing layoffs, ‘epic’ drops in bank lending (per the WSJ) and lousy consumer confidence is not unexpected… as that is what happens when Obama and a Democratic-controlled Congress keep acting in ways that just plain scares people.
steve sturm (369bc6) — 2/24/2010 @ 11:16 amCome April or May, expect to see another drastic “unexpected” drop in employment. At that time, the folks hired to either gather or input data for the 2010 US Census. It’s been estimated that between 200,000 up to 1 million jobs have been temporarily created for the census (and are likely part of the tiny decrease in unemployment numbers). But in a few months, it will be another “unexpected” occurrence that will take its toll.
Roughly, it’s the adage of “what the government can give, it can also take away.” Kinda like “Cash for Convicts.”
[note: fished from spam filter. –Stashiu]
ClassicFilm (131cd5) — 2/24/2010 @ 11:29 amand that home-buying welfare credit thingy expires April 30th…
Wanna bet they vote to renew it? Wanna wager how many Republicans vote for it?
happyfeet (71f55e) — 2/24/2010 @ 11:32 amone of our Hot Air friends has this comment…
Another Hot Air friend later on says he saw a news report of this happening in Richmond, Va.
This is Barack Obama’s America.
happyfeet (71f55e) — 2/24/2010 @ 11:38 amIf we all pitch in and create more green space – why that’s eco-friendly and will stop global warming, clean the air, and bring peace to the universe.
Corwin (ea9428) — 2/24/2010 @ 1:00 pmThought I saw a report out of ‘Vegas that the bottom-end of the re-sale market was drying up and that people looking for the big bargains were having to raise their sights a bit.
AD - RtR/OS! (955a97) — 2/24/2010 @ 1:12 pmOr, that just means that the next wave of foreclosures hasn’t hit yet.
I think we are seeing a little bump here in OC with home sales. I have listed mine for sale and we will see what happens. The realtor tells me she has five houses in escrow. I think there are some people who have been holding off and think it is near bottom. Anyway, my plans are a bit fluid now and I think this is the best time to sell for a while. After this summer, I think we will see another decline. By that time, I hope to be ensconced in a quiet, low traffic spot and the place I have in mind has REALLY been hit as it is a resort with lots of second homes. Interesting times, as they say.
Mike K (2cf494) — 2/24/2010 @ 1:16 pmhere’s the good news in Sacramento….
and i’ll admit a bit of a chuckle that this is where all the geniuses who govern California get together…. you’d think they’d notice something was wrong. the money quote is at the end, by a former coffee shop owner: “Everyone,” she said, “is perfectly content with getting by with less.”
redc1c4 (fb8750) — 2/24/2010 @ 1:26 pmand this guy thinks the stock market rally is about to end.
redc1c4 (fb8750) — 2/24/2010 @ 1:39 pmThe dies are cast for the economy this year. Obama has painted himself into a corner with no way to make a window to get himself out. Using the fact that economist are great at watching the past but almost always wrong on their prediction we find most saying there will not be a double dip recession. So it looks like we will have a double dip recession sometime starting in the third quarter of this year. Obamanomics will simply be careening along after that until he leaves office in 2013.
cedarhill (6c4d1b) — 2/24/2010 @ 1:49 pmgood luck Dr. K …I think you’re right about another decline… I hope boss person buys before then but he’s been “buying a house” for two years now…
happyfeet (71f55e) — 2/24/2010 @ 1:52 pm10: Print “BREAKING: INSERT TODAY’S ECONOMIC FACT is completely contrary to what our experts expected. Now, let’s listen to what those same experts say will happen tomorrow.”
20: Print Obama Economist Spin
30: GOTO 10
Dustin (b54cdc) — 2/24/2010 @ 1:57 pmbrings new meaning to the phrase “expect the unexpected.”
Seriously, i have a brilliant investment strategy. find these people who are always expecting what doesn’t actually happen. Ask them if they expect stock X, Y, and Z to go up or down. bet on the opposite occurring.
Apparently this strategy is close to a sure thing.
A.W. (e7d72e) — 2/24/2010 @ 2:13 pmWanna bet they vote to renew it? Wanna wager how many Republicans vote for it?
Comment by happyfeet — 2/24/2010 @ 11:32 am
Not sure how many, but I’ll bet the farm Scott Brown does.
Matador (176445) — 2/24/2010 @ 4:18 pmI wonder whether the AP writer is using the word “unexpectedly” ironically? In other words, it’s a bit of snideness about the Obama administration and the way that leftists perceive him to have let them all down about how he wants to manage the economy.
Steven Den Beste (99cfa1) — 2/24/2010 @ 4:20 pmJust more results of Big Zero’s “extraordinary measures to save our economy”.
Combine that trend with the fact that 25% of home mortgages are “under water” and I don’t think Americans can afford any more help from Big Zero.
GeneralMalaise (c58b20) — 2/24/2010 @ 4:31 pmMaybe, but I get the feeling “Unexpectedly” is the new “Alledgedly”, so they don’t have to 100% acknowledge that its actually happening on their watch.
Matador (176445) — 2/24/2010 @ 4:32 pmHilarious piece, Karl … unexpectedly.
SPQR (26be8b) — 2/24/2010 @ 5:39 pmCome November, I’m sure it’ll be “un-expected” when liberty loving Americans drain the freaking swamp
DaveinPhoenix (91be24) — 2/24/2010 @ 6:22 pmWhoa! Let’s not get ahead of ourselves. As the government statisticians warned us, these numbers are subject to revisions. They could be revised upward.
Or…
Gesundheit (6acc51) — 2/24/2010 @ 7:24 pmEnchanting!
Or something.
Patricia (e1047e) — 2/24/2010 @ 8:34 pmAmericans are casting a vote of no confidence in Obamanomics.
The guy in the Oval Office certainly hasn’t helped matters — or he’s pretty much made a bad situation even worse — but a good portion of a lack of economic synergy in America is tied to a peculiar malaise found in many other parts of the world, particularly areas like socialized, EU-effette Europe or maxed-out, aging Japan.
Mark (411533) — 2/24/2010 @ 8:45 pmSteven Den Beste
> I wonder whether the AP writer is using the word “unexpectedly” ironically?
I always say something similar when I see the Democratic Party promote voter fraud, the exclusion of military ballots, legislation by the courts, and general disdain for the wishes of the electorate. Maybe the term “Democratic Party” is meant ironically.
A.W. (e7d72e) — 2/25/2010 @ 5:47 amI think the housing market is such that NEW home sales are going to be down for a while, regardless of the overall economic element.
We overbuilt for way too long, and as a result there is a glut of many excess houses lying around that has to be sucked up before you will be able to justify building a NEW home as a better deal than an “old” home that’s 3-5 years old and unoccupied or up for a quick sale because the owners are about to lose it otherwise (and that’s if they haven’t and the bank has already taken it over and are just looking to get ANY of their liquidity back).
IgotBupkis (79d71d) — 2/25/2010 @ 10:02 am