Housing: 2006 thread, use the 2007 thread instead.

[jlmadyson]

U.S. February Home Resales Rise 5.2 Percent to 6.91 Mln Rate

Existing Home Sales

March 23 (Bloomberg) -- Sales of existing homes unexpectedly rose in the U.S. last month for the first time since August, after mild temperatures brought buyers out early.

Resales in February rose 5.2 percent to an annual rate of 6.91 million, compared with a revised 6.57 million a month earlier, the National Association of Realtors said today in Washington. The supply of unsold homes at the end of the month rose 5.2 percent to 3.03 million.

Today's report reflects the closing of contracts signed in January, when record-warm temperatures and lower mortgage rates brought more people into the market than is typical for that month, economists said. Sales of new and existing homes probably will fall this year for the first time since 2000 as rising mortgage rates and selling prices put home purchases out of the reach of more people.

``The existing market is starting to stabilize, or is finding a bottom or at least a new equilibrium level,'' Michael Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report. ``We're still looking at a good fundamental market.''

Earlier, the U.S. Labor Department reported first-time claims for unemployment benefits fell 11,000 last week to 302,000, the first decline in four weeks.

Resales were expected to fall to an annual rate of 6.5 million from January's originally reported 6.56 million, according to the median of 60 forecasts in a Bloomberg News survey. Estimates ranged from 6.25 million to 6.75 million.

Soft-Landing

``What we have here is still the soft-landing scenario we've been predicting over this year,'' said David Lereah, chief economist for the Realtors' group, at a press briefing. ``I suspect the increase we have in this report is an aberration because of the weather.''

The median price of an existing home rose 11 percent in February from a year ago to $209,000, the Realtors group said.

The increase in the supply of homes for sale kept inventories at 5.3 months' worth, the same as in January and the most since August 1998.

``The housing market is in transition from more of a sellers market to a buyers market on a national level,'' John Sauro, president of North Atlantic Mortgage Corp., said in an interview on March 16.

Resales of single-family homes rose 4.7 percent to an annual rate of 6.06 million. Sales of condos and co-ops rose 8.8 percent to an 850,000 rate.

Regional Sales

Home resales rose in all regions except the South. Sales increased 19 percent in the Northeast to 1.18 million, 11 percent in the Midwest to 1.6 million, and 5.1 percent in the West to 1.44 million. Sales fell 2.5 percent in the South to 2.69 million.

Sales of both new and existing homes probably will fall this year to a total 7.85 million, from 8.35 million last year, the National Association of Realtors said on March 13. New home sales account for about 15 percent of the housing market and existing home sales make up the rest.

KB Home, the fifth-largest U.S. homebuilder by market value, said yesterday that fiscal first-quarter earnings rose 42 percent, the smallest gain in four quarters, as rising mortgage rates cooled the housing market.

New Home Sales

Economists expect the Commerce Department to report tomorrow that new home sales fell in February to a 1.2 million rate from January's 1.233 million, according to a Bloomberg survey. New home sales are counted when a contract is signed and are therefore considered to be a more current indicator of the state of the housing market.

``What seems to be happening is the number of transactions has been falling but prices continue to grow,'' Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, said before the report. ``Over time, the rate of price increases is likely to slow this year.''

The average rate on a 30-year mortgage rose to 6.25 percent in February, from 6.15 percent the month before, according to Freddie Mac. At last month's average, interest and principal costs for each $100,000 of a loan would be $615.72 a month.

The median price on an existing home will rise 5.8 percent this year, the Realtors group said on March 13. U.S. home prices rose 13 percent in the fourth quarter from a year earlier, the Office of Federal Housing Enterprise Oversight said on March 1.

The economy will enjoy ``solid growth'' this year, though a larger-than-expected slowdown in the housing market may cut into consumer spending, Federal Reserve Bank of Boston President Cathy Minehan said in a speech on March 20 to the Massachusetts Association of Realtors in Boston.

``We see construction diminishing somewhat and real estate prices flattening, not declining,'' Minehan said. ``Clearly, however we could be wrong on the magnitudes,'' and that may be a ``downside risk to growth.''

The economy probably will expand at a 4.7 percent rate this quarter, the fastest since the third quarter of 2003, and growth will slow to a 3.0 percent rate by the end of the year, according to a Bloomberg survey taken from Feb. 27 to March 7. Residential investment probably will subtract from economic growth this year for the first time since the end of 2001, according to the Mortgage Bankers Association.

Not too bad overall.

 

[dullard]

Originally posted by: jlmadyson
U.S. February Home Resales Rise 5.2 Percent to 6.91 Mln Rate
Existing Home Sales

Not too bad overall.

I need to stop working in the morning, you are beating me to the punch, jlmadyson.

I'd say it is too early to say for certain that the housing is leveling off. One month doesn't make a trend. But at least the 4 month skid downward was stopped. Time will tell. This 6.91M level was still less than 11 of the 12 months in 2005.

Average and median prices both have fallen 4 straight months in the US. Of course, this is not seasonally adjusted and the National Association of Realtors excludes owner sales. But is this the possible start of the housing price bubble deflating?

 

[jlmadyson]

Home sales post biggest jump in 2 years

NEW YORK (CNNMoney.com) - Home sales posted their biggest jump in two years in February, a trade group said Thursday in a report that showed surprising strength in the housing market.

The National Association of Realtors reported existing homes sold at an annual rate of 6.91 million in February, up from a revised 6.57 million pace in January. The 5.2 percent rise was the biggest gain since a 5.9 percent jump in February 2004.

Economists surveyed by Briefing.com had forecast a drop to an annual pace of 6.5 million last month.

Biggest jump in 2 years, per cnn. Yea, not any trend to be found yet, but certainly better than expected overall. Of course, I'm not sure if the market likes this particular piece of data all that well, another piece of data that may mean more than just two fed rate hikes to come.

 

[DealMonkey]

This very thread proves that economic theory is guess-work, no one can predict the future, and all of the blabbering and media whoring over the alleged 'housing bubble' is just a whole lot of hot air.

I need to go look up my posts where I indicated all of the doom and gloom in the media over the housing market since about November '05 was merely seasonal doldrums and that things *always* pickup March 1st.

 

[dullard]

Originally posted by: DealMonkey
This very thread proves that economic theory is guess-work, no one can predict the future, and all of the blabbering and media whoring over the alleged 'housing bubble' is just a whole lot of hot air.

How is this proof? Could you please elaborate?

I need to go look up my posts where I indicated all of the doom and gloom in the media over the housing market since about November '05 was merely seasonal doldrums and that things *always* pickup March 1st.

And now you are predicting? Um, almost all of the numbers posted here are already are seasonally adjusted to REMOVE the pickup in spring. Time will tell what really happens.

I personally predict that housing prices soared higher than there was support in many areas. Thus, in these areas, prices will fall back down to the support level. The support level is growing, but just not as fast as prices were. The massive increase in non-standard loans so people could barely get into the house they want if they juggle a half dozen accounts points to a fundamental problem. This problem will need to be addressed at some point in time. That point is quickly approaching (ie the first 5 year ARMs come to variable interest rates in 2006 meaning drastically higher mortgages for those people who were the first to get them). Will they sell if they cannot afford the new interest rates? Will they suffer through it? I bet it'll be split. But that still means greater selling pressure that wasn't there before.

 

[DealMonkey]

Originally posted by: dullard

Originally posted by: DealMonkey
This very thread proves that economic theory is guess-work, no one can predict the future, and all of the blabbering and media whoring over the alleged 'housing bubble' is just a whole lot of hot air.

How is this proof? Could you please elaborate?

Well, let's see -- over 60 separate forecasts of the housing market averaged together got it wrong. If that's not proof, what is?

Resales were expected to fall to an annual rate of 6.5 million from January's originally reported 6.56 million, according to the median of 60 forecasts in a Bloomberg News survey. Estimates ranged from 6.25 million to 6.75 million.

 

[DealMonkey]

Originally posted by: dullardAnd now you are predicting? Um, almost all of the numbers posted here are already are seasonally adjusted to REMOVE the pickup in spring. Time will tell what really happens.

Please point out where in the Bloomberg article (Linkage) that it indicates the figures are "seasonally adjusted." I certainly didn't see that mentioned anywhere...

 

[dullard]

Originally posted by: DealMonkey
Well, let's see -- over 60 separate forecasts of the housing market averaged together got it wrong. If that's not proof, what is?

That is the most silly useless proof I've ever seen. Monthly preliminary numbers are quite volitile. Volitile monthly numbers CANNOT be predicted with any level of accuracy (that is the definition of volitile numbers). But trends CAN be predicted.

 

[dullard]

Originally posted by: DealMonkey
Please point out where in the Bloomberg article (Linkage) that it indicates the figures are "seasonally adjusted." I certainly didn't see that mentioned anywhere...

Right Here. Top left box. From Feb 2005 to Jun 2005, the unadjusted numbers went from 402,000 to 753,000 in a month (nearly doubled). The adjusted numbers went from 6.93M annual to 7.27M annual. The annual adjusted numbers barely moved when the unadjusted numbers nearly doubled.

 

[DealMonkey]

Originally posted by: dullard

Originally posted by: DealMonkey
Please point out where in the Bloomberg article (Linkage) that it indicates the figures are "seasonally adjusted." I certainly didn't see that mentioned anywhere...

Right Here. Top left box.

So seasonally adjusted existing home sales are off -0.3% vs last year and you call that a trend? If you're looking for a trend, even the seasonally adjusted numbers show a dip Dec 2004-Feb 2005 and the rest of 2005 showing strong numbers until ... wait for it ... December 2005. I rest my case.

 

[dullard]

Originally posted by: DealMonkey
I rest my case.

You haven't really stated a case yet. So state it in this thread, prove it, then rest it. I'll be here in the next year+ and we will see the results.

So far, I see your case is that it cannot be predicted. Is that what you are resting?

 

[DealMonkey]

Originally posted by: dullard

Originally posted by: DealMonkey
I rest my case.

You haven't really stated a case yet. So state it in this thread, prove it, then rest it. I'll be here in the next year+ and we will see the results.

So far, I see your case is that it cannot be predicted. Is that what you are resting?

My case is extremely simple:

1.) Dec-Feb are typically slow months for existing home sales and even the seaonally adjusted figures support that. Or are you still disputing that?

2.) Even if there were a "housing bubble," and I'm by no means convinced there is, it would never follow any kind of logic and thus reinforces my belief that if you really think you can predict the future performance of the housing market, then perhaps you should also be trying to beat the market as well with your precognitive super powers.

(Note: This isn't directed at *you* but rather those in the media who believe they can see the future.)

By their very nature, "bubbles," whether in the stock market or in the housing market, are irrational and driven by exuberant investors and speculators and thus defy any kind of rational prediction of future performance.

 

[dullard]

Originally posted by: DealMonkey
By their very nature 'bubbles,' whether in the stock market or the housing market, are irrational and driven by exuberant investors and speculators.

Ah, irrational exuberance - the bane of investors. True, you have to be psychic or psychotic to think you can understand and predict irrational exuberance. However, even irrational exuberance ends and thus the end of it can be predicted (although the timing may be off a bit). I don't think however, that housing is quite at that stage.

We had a whole lot of special things coming together all at once that caused housing to boom.
[*]Housing prices had been stagnant for a long time, thus making them inexpensive investments. They were ripe for rising. Buy low, sell high.
[*]Interest rates went to 40 year lows almost overnight.
[*]Other investment bubbles burst and that freed up tons of money to go somewhere. Stocks weren't the answer for all of that time (they've gone nowhere in 5 years).
[*]Greenspan encouraged and received more bank support for unusual, higher risk loans.
Thus, of course housing prices shot up. That wasn't irrational at all.

Now the opposite is happening.
[*]Housing prices are soaring, thus making them costly investments (buy high, sell higher is quite risky investing). History has shown that after booms come a bust. Housing has busted in the past, thus another bust is likely to follow after this boom.
[*]Interest rates are steadilly rising. It was delayed in the mortgages until late 2005 though, so it really didn't kick in until recently.
[*]Other investments are ready for buying. So investors can move money from housing to other investments.
[*]Those special higher risk loans are being slighly curtailed. And many of the initial ones are ending in 2006.
Thus, it is rational to predict that the end of the factors that led to the boom will lead to the end of the boom.

My case is that the boom will slow drastically. The reasons for this are listed above. Proof of this slowing is in the end of nationwide price increases, the end of the housing sales increases, the rising interest rates, the increase in forclosures, the dropping of builder confidence, the highly volitile housing starts numbers (looking for a direction), etc. All of these point to the end of the drastic increases in housing values. Will they go negative for a significant amount of time? Probably not nationwide. But the 10%, 20%, 30% per year housing price increases are going to end in 2006/2007. Do you honestly think 30% per year gains will continue forever?

 

[jlmadyson]

U.S. Feb. new home sales down 10.5% to 1.08 mln units

New Residential Sales in February 2006

WASHINGTON (MarketWatch) - U.S. new home sales slumped 10.5% in February to their lowest level since May 2003, the Commerce Department estimated Friday. The decline was larger than forecast. Economists expected sales to slip to 1.21 million. Sales in January were revised lower to a 1.207 million unit pace from 1.233 million previously estimated. The inventory of unsold homes on the market rose by 4.4% to a record 548,000, representing a 6.3-month supply at the February sales pace. This is the largest month-supply since January 1996. The median sales price fell by 2.9% year-over-year to $230,400 in February.

Hmm, mixed data between the existing and new. Possibly just 2 more hikes to come perhaps.

 

[dmcowen674]

OP needs to update Title

3-24-2006 New Home Sales Plummet in February by Largest Drop in Nine Years

WASHINGTON - Sales of new homes plunged by the largest amount in nearly nine years in February while the median price of a new home dropped for the fourth straight month, providing fresh evidence that the nation's once-booming housing market is cooling off.

It was the second straight monthly decline and was much bigger than the small 2 percent dip that Wall Street was expecting.

Orders for motor vehicles dropped by 3.3 percent in February after a 3.2 percent decline in January.

American automakers have been struggling with increased foreign competition and sagging demand for sport utility vehicles in the face of rising gasoline prices.

 

[dullard]

Originally posted by: dmcowen674
OP needs to update Title

Hey, I have to work sometimes.

Original post will be updated in a few minutes.

 

[WhipperSnapper]

The housing market is one of the few industries that has driven our economy in the past few years (since just about everything else has been outsourced or now uses foreign labor on work visas). This is a bad sign, a sign that reality might finally be catching up with us and that the next recession is on its way.

However, since the overall trend for our economy is downward, the malaise we've suffered was partially masked by the "boom" cycle in the economy. When the recession hits, it could be very, very bad, and then we'll see that the overall trend for our economy is downwards. Perhaps some of the Panglossians will even lose their jobs and get to face economic reality. (They'll just blame themselves rather than see reality, though.)

 

[dmcowen674]

Originally posted by: WhipperSnapper

The housing market is one of the few industries that has driven our economy in the past few years (since just about everything else has been outsourced or now uses foreign labor on work visas). This is a bad sign, a sign that reality might finally be catching up with us and that the next recession is on its way.

However, since the overall trend for our economy is downward, the malaise we've suffered was partially masked by the "boom" cycle in the economy. When the recession hits, it could be very, very bad, and then we'll see that the overall trend for our economy is downwards.

Perhaps some of the Panglossians will even lose their jobs and get to face economic reality. (They'll just blame themselves rather than see reality, though.)

Too funny but sadly the truth.

 

[shurato]

Will any of this have an effect on rental prices for apartments? You have to pay minimum $1k a month for a halfway decent 1 bedroom apartment around here. Kind of rediculous when that would of been a house payment not too long ago.

 

[conjur]

Originally posted by: shurato
Will any of this have an effect on rental prices for apartments? You have to pay minimum $1k a month for a halfway decent 1 bedroom apartment around here. Kind of rediculous when that would of been a house payment not too long ago.

Apartment prices around here had been dropping and then stabilizing over the last few years. They go by vacancies. If people are buying homes, apartments stay vacant and they lower prices to attract tenants. Vice versa.

 

[dullard]

Originally posted by: shurato
Will any of this have an effect on rental prices for apartments? You have to pay minimum $1k a month for a halfway decent 1 bedroom apartment around here. Kind of rediculous when that would of been a house payment not too long ago.

And now you see the value of getting a house. Even though you will likely pay a bit more initially, as apartment prices soar, you can keep paying the same amount for 30 years. And then after that, it is even less expensive.

Of course housing has an impact on apartments. It is all supply and demand. When people move in bulk from one form to the other, prices will change. However, the link of apartment prices to any of this data is probably fairly weak. A small price fluctuation in housing will likely have very little impact on apartment pricing.

 

[conjur]

Banks raising prime lending rate to 7.75% in light of recent Fed .25% interest rate hike.

Stock markets dropping like a rock in response (DOW was up 20 earlier today)

Dow 11,148.86 -101.25 (-0.90%)
Nasdaq 2,301.33 -14.25 (-0.62%)
S&P 500 1,292.36 -9.25 (-0.71%)
10-Yr Bond 4.778 +0.77 (+1.64%)

 

[WhipperSnapper]

Originally posted by: dullard

And now you see the value of getting a house. Even though you will likely pay a bit more initially, as apartment prices soar, you can keep paying the same amount for 30 years. And then after that, it is even less expensive.

Of course housing has an impact on apartments. It is all supply and demand. When people move in bulk from one form to the other, prices will change. However, the link of apartment prices to any of this data is probably fairly weak. A small price fluctuation in housing will likely have very little impact on apartment pricing.

It might also affect different classes of apartments. The lower class apartments aren't affected that much since the people renting the lower apartments probably couldn't afford a house anyway. However, the nicer apartments could take a hit. When I was looking for apartments two Summers ago I remember talking to an agent at an apartment search firm who said that the middle class and upper middle class people who normally rent the nice apartments were buying houses in mass, creating all sorts of "two months free rent" deals. The dilemna for the nice apartment complexes was probably to rent the apartments to decent people and not low-lifes.

 

[LegendKiller]

May rate hike is 96% certain, further rate hikes went from 0% to 18% according to the street.

 

[dmcowen674]

Bahahahahaha

The free money train for Developers is finally coming to a stop.

Say Good bye to the borrow and spend Republican deception.

It's Depression time sheeple, you deserve it.