Posts tagged months supply
New Home Sales and Bear Market Math
Jul 28th
One can’t help but laugh at headlines touting a huge 23.% jump in new home sales given that the “jump” was to the second worst month in history, dating back to 1963.
Dave Rosenberg puts the headline jump into perspective in Housing Data Are Not Supportive.
Market sentiment is positive and as a result of the market going straight up, people believe that the economic data are somehow getting better. Not the case at all.April new home sales were revised DOWN to a 422k annual rate from 504k when the data for the month were first released. You know what that means? It means that the homebuyer tax credit was even a bigger dud than we thought it was previously. No bang for the buck from these spending gimmicks.
May new home sales were revised DOWN to 267k units from 300k. That sure puts a 23.6% “jump” to 330k into perspective, doesn’t it? It’s called bear market math.
At 330k in June, this goes down as the second worst month on record (data back to January 1963). And in per capita terms it is far worse than that considering the population has expanded 63% since then.
Now, if we take the original unrevised number for April, the unrevised May data-point, and the June consensus estimate of 310k, then the average of the past three months would have been 371k. But post-revisions and with the actual June print, sales have averaged 340k at an annual rate.
That puts the data into proper context. We are actually left with a weaker three-month profile of home sales after the release of the data yesterday, not the opposite. Also, it took a median of 12.4 months for the builders to locate a buyer upon completion – a record for June.
The unsold inventory number was also revised sharply higher in May and because of that, the backlog looks so much better now – from 9.6 months’ supply to 7.6 months’. Even so, a well-balanced market, as any real estate agent will tell you, is 5-6 months’ supply.
Maybe this is why the average sales price was cut 9.8% MoM in the third steepest month ever in terms of discounting. At $242,900 for an average price of a new home sold, this represented the lowest number since October 2003 and off 26% from the 2007 peak.
But just think about that for a second. The third largest price cut in history managed to generate the second worst new home sales tally on record. This is something to get excited about?
Given that housing leads recoveries (more specifically housing starts followed by new home sales), this is another nail in the coffin that suggests there has been no recovery except in financial assets. Moreover, that financial recovery is only a result of unsustainable stimulus that is now quickly fading into the sunset.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Here’s The Story Behind The Worst June Ever For Housing
Jul 26th
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 330 thousand. This is an increase from the record low of 267 thousand in May (revised from 300 thousand).
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In June 2010, 30 thousand new homes were sold (NSA). This is a new record low for June.
The previous record low for the month of June was 34 thousand in 1982; the record high was 115 thousand in June 2005.
The second graph shows New Home Sales vs. recessions for the last 47 years. Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 … This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply decreased to 7.6 in June from a revised 9.6 in May (revised from 8.5). The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
The final graph shows new home inventory.
The 267 thousand annual sales rate for May is the all time record. This is a very sharp downward revision.
The 330 thousand in June is the worst June on record. With all the gyrations, it is difficult to see what is happening month to month, but overall this was a very weak report.
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This guest post previously appeared at Calculated Risk >
New Home Sales: Worst June on Record
Jul 26th
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 330 thousand. This is an increase from the record low of 267 thousand in May (revised from 300 thousand).
Click on graph for larger image in new window.
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In June 2010, 30 thousand new homes were sold (NSA). This is a new record low for June.
The previous record low for the month of June was 34 thousand in 1982; the record high was 115 thousand in June 2005.
The second graph shows New Home Sales vs. recessions for the last 47 years.
Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 … This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply decreased to 7.6 in June from a revised 9.6 in May (revised from 8.5). The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
The final graph shows new home inventory.
The 267 thousand annual sales rate for May is the all time record. This is a very sharp downward revision.
The 330 thousand in June is the worst June on record. With all the gyrations, it is difficult to see what is happening month to month, but overall this was a very weak report.
Phoenix Real Estate Market Summary – July 2010
Jul 12th
Mike Orr, founder of the Cromford Report, does a fabulous job of looking at the details of the Phoenix real estate market. So thorough that , with his permission, I’m sharing his full report for July 2010.
I’ve taken the liberty of underlining what I see as the highlights of his very detailed information and our current real estate market.
Market Summary for the Beginning of July
Cromford Report – July 4, 2010The overall market continues to deteriorate. If we compare some key indicators with the same time last month and last year we see that:
- Active listings are up slightly (1.7%) from June and 11% higher than last year.
- Pending listings are down 17% from June and 18% lower than last year.
- Listing success rate is down to 63.5% compared with 65.5% last month and 62.7% last year.
- Sales price % of list has fallen to 96.07% from 96.22% in June and 96.11% last year.
- Days inventory rose from 156 to 159 in June, but was 177 last year.
- Months supply rose from 4.3 to 4.7 in the last month but was 4.1 last year.
Only the change in pending listings could be regarded as a major movement, but the changes are mostly negative and we have witnessed the Cromford Market Index™ falling to 99.5 from 108.7 last month and 115.2 on July 3, 2009. We now have a market where supply is roughly equivalent to demand. The period when demand outstripped supply lasted from May 18, 2009 to July 1, 2010. The significant danger now is that this trend will continue, and we think this is most likely at the bottom end of the market. If the Cromford Market Index™ continues to fall at the current rate for several months, then the outlook is not rosy. However, if it stabilizes between 90 and 100 then this range can be considered perfectly normal and the market is likely to stay stable. Individual cities that show the weakest Cromford Market Index™ readings (as of July 1) include:
- Maricopa (67)
- Chandler (85)
- Cave Creek (88)
- Sun City West (88)
- Sun City (91)
- Queen Creek (91) – (includes San Tan Valley)
- Gilbert (92)
- Laveen (94)
- Scottsdale (95)
A clear exception to the trend can be seen in Paradise Valley where the Cromford Market Index™ has improved to 101, its highest reading since March 2006. Here supply has fallen quite quickly in recent months while demand has improved, largely due to more realistic pricing by sellers.
Monthly closed sales were 9,261 in July and 9,029 in June, so these are still strong due to the large backlog of contracts signed by April 30. However the monthly sales number has fallen 3.5% below the equivalent 2009 level, and looks to be headed lower for July and August.
A piece of good news is that the deterioration in the Greater Phoenix market seems to be less than that reported in most other parts of the US. The National Associates of Realtors® (NAR) reported that their national Pending Home Sales index fell to 77.6 in May, down 30% from April. The decline was lowest in NAR’s west region where it fell 20.9%. We reported a 13.65% decline in pending listings between April and May.
The market for lender owned properties has deteriorated the most:
- REO active listings are up 15% over June 3, 2010 and 24% over July 3, 2009.
- REO pending listings are down 17% from June and 39% lower than last year.
- REO listing success rate is down to 92.3%, compared with 94.0% last month and 91.2% last year.
- REO sales price % of list has fallen to 98.09% from 98.38% in June and 99.15% last year.
- Days inventory rose from 44 to 53 in the last month and was 41 last year.
- Months supply rose from 1.4 to 1.8 in the last month and was only 0.9 last year.
Buyers have clearly reduced their appetite for lender owned properties, but the trustees are still generating REOs at a fairly constant rate when measured over a three month period. The result is that the contract ratio for REOs on ARMLS has fallen from a peak of 163.87 on June 18, 2009 to only 68.31 on July 3, 2010. The trend is still downwards so we can expect future weakness in the REO market, especially compared with the frantic buying of 2009. Average list price per sq. ft. for active REOs has fallen from $87.56 on April 1 to $81.72 on July 3. Average $/SF for active REO listings is now lower than this time last year though still higher than April 2009 when it averaged about $78 per sq. ft. Median sales prices for REOs have fallen back from $105,000 in early June to $99,000 now. The lowest recorded median sales price for REOs was $88,640 on April 24, 2009, so we are still well above that low point.
Significant good news is that banks are issuing fewer new foreclosure notices. The new notice count for June 2010 was the lowest monthly number since April 2008. Since there are fewer properties going into foreclosure while the rate of trustee sales remains flat, the inventory of pending foreclosures is falling fast. We can see in the following chart that the peak (just over 51,000) was reached at the end of 2009 and since March the fall has been accelerating, We now have 42,586 properties in Maricopa County pending foreclosure, down about 17% in six months. This tells us that the foreclosure tsunami is finally starting to flow back out.
If we look more closely at short sales, we see that the situation is looking more mixed. Compared with last month, active listings are up a little, while pending listings are down a little. However the monthly sales rate is at a new high point of 2,341. Listing success rate and sales price % of list are both improving, but the contract ratio is down from 123.4 last month to 108.3. This is still a very healthy number and higher than the 104.8 we saw at the same time last year. Overall, short sales are doing pretty well and better than many people expected at this time last year.
For normal listings, the active listing count is still falling, but the pending listing count is falling faster. The monthly sales rate is also falling, as is the listing success rate and the sale price % of list. However all of these measurements remain higher than last year. This suggests a temporary lull in the market rather than a major change in direction. It seems natural that the expiry of the tax credit would cause a temporary lull. Is something else happening? We don’t yet know for sure.
The media is once again full of phrases like “collapse”, “plummet”, or even “carnage”. Talk of “mild to moderate deterioration” does not make good headlines, but it is an accurate description of what is currently happening in Greater Phoenix. Before we panic, let us remember that pending listings are still at the second highest level ever for July (lower than 2009 but higher than 2005). See chart below for confirmation. Of course the new home market is still very quiet, but contracts for resales, and especially short sales, are still doing very nicely, even after the tax credit expiry.
We shall have to wait until the effects of the tax credit have worked their way through the market. By the end of August we should be able to confirm whether there is additional underlying weakness in demand and, if there is, examine its possible causes by investigating the locations and price ranges most affected.
Rosenberg: Here Are 15 Signs The Economy Is Rolling Over
Jul 6th
Glusken Sheff economist Dave Rosenberg says the markets have NO reason to be rallying today. What’s happening right now is a “temporary and technical snapback,” he says in a morning note.
Investors should be worried about major speed bumps, which could drive the Dow down to 5,000.
ISM down to 56.2 in June from 59.8, a six-month low
NAHB homebuilder index slumps from 22 in May to 17 in June, tied for the steepest decline in the past four years and a three-month low.
Consumer confidence sank to 52.9 in June from 62.7 in May, a three-month low. A decline of this magnitude is basically a 1-in-20 event.
Retail sales slipped 1.2% MoM in May, the first decline since last September.
Auto sales fell 5% in June, to an 11.1 million annual rate, the lowest in four months.
Manufacturing new orders shrank 1.4% in May, the steepest decline since the depths of despair in March 2009, and a new three-month low.
Housing starts collapsed 10% MoM in May, to 593k at an annualized unit rate, a five-month low.
New home sales plunged 33% in May to an all-time low of 300k at an annual rate. The housing inventory backlog surged to 8.5 months’ supply in May from 5.8 months in April, the highest volume of excess supply since last June.
Household employment fell 301k in June after a 35k loss in May, snapping a four-month winning streak. The index of aggregate hours worked dipped to 92.0 from 92.2 and is lower now than it was at the market lows of March 2009 when the index was 93.3.
Wages declined at a 1.1% annual rate in June — this never happened during the recession and is a 1-in-50 event. Rare indeed.
Consumer prices deflated 0.2% in May after a 0.1% dip in June — the first back-to-back declines since November-December of 2008 and before that September-October of 2006 and before that, April-May of 2003. Again, hardly a normal occurrence.
Producer prices slipped 0.3% MoM on top of a 0.1% decline in May. The PPI has now declined in three of the past four months — this last happened as the market, yet again, was plumbing the deflationary depths in early 2009 (but hey, isn’t the recession supposedly over?).
Mortgage applications for home purchases fell 15% in June after an awful 18% plunge in May, to stand at the lowest level in … thirteen years.
Bank credit dipped 0.2% in June, the third decline in a row.
Exports dropped 1.4% in April and now down for two of the past three months. The bloom is off the rose as far as the explosive expansion in global trade flows is concerned.
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Image: garryknight on flickr
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The Real Story Behind Today’s Record Home Sales Collapse
Jun 23rd
The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 300 thousand. This is a sharp decrease from the revised rate of 446 thousand in April (revised from 504 thousand).
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In May 2010, 28 thousand new homes were sold (NSA). This is a new record low.
The previous record low for the month of May was 34 thousand in 2009; the record high was 120 thousand in May 2005.
The second graph shows New Home Sales vs. recessions for the last 45 years.
Sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000 … This is 32.7 percent (±9.9%) below the revised April rate of 446,000 and is 18.3 percent (±13.0%) below the May 2009 estimate of 367,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply increased to 8.5 in May from 5.8 April. The all time record was 12.4 months of supply in January 2009. Since the sales rate declined sharply, the months of supply increased – this is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of May was 213,000. This represents a supply of 8.5 months at the current sales rate.
The final graph shows new home inventory.
New home sales are counted when the contract is signed, so the tax credit related pickup in sales activity happened in April. This pulled demand forward, and April was probably the peak for new home sales this year.
The 300 thousand annual sales rate is a new all time record low. The previous record low annual sales rate was 338 thousand in September 1981.
Read more at Calculated Risk –>
New Home Sales collapse to Record Low in May
Jun 23rd
The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 300 thousand. This is a sharp decrease from the revised rate of 446 thousand in April (revised from 504 thousand).
Click on graph for larger image in new window.
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In May 2010, 28 thousand new homes were sold (NSA). This is a new record low.
The previous record low for the month of May was 34 thousand in 2009; the record high was 120 thousand in May 2005.
The second graph shows New Home Sales vs. recessions for the last 45 years.
Sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000 … This is 32.7 percent (±9.9%) below the revised April rate of 446,000 and is 18.3 percent (±13.0%) below the May 2009 estimate of 367,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply increased to 8.5 in May from 5.8 April. The all time record was 12.4 months of supply in January 2009. Since the sales rate declined sharply, the months of supply increased – this is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of May was 213,000. This represents a supply of 8.5 months at the current sales rate.
The final graph shows new home inventory.
New home sales are counted when the contract is signed, so the tax credit related pickup in sales activity happened in April. This pulled demand forward, and April was probably the peak for new home sales this year.
The 300 thousand annual sales rate is a new all time record low. The previous record low annual sales rate was 338 thousand in September 1981.
