Housing: 2006 thread, use the 2007 thread instead.

[dullard]

Originally posted by: Engineer
It will be more interesting to watch those with ARM (Adjustable rate mortgages) and how they react to rising interest rates. If a number rush in to refinance to locked mortgages, it could be shown as a skew in the numbers. If they hold on to them, they might just be fvcked! :shocked:

Yep, and that time is coming quickly. Hmm, 5 year ARMs became popular how many years ago? Oh yeah, almost 5 years ago.

 

[Engineer]

Look out below....

Look Out Below
by John Rubino




The world is full of people with little or no real estate experience (okay, like me) who still claim to know the business well enough to predict a crash. It's also full of real estate industry pros who, deep in denial, seem to expect a soft landing followed by another long, glorious boom.

So when an actual real estate expert crosses over to the dark side, it's news.

This morning I'm reading through a 31-page report compiled for internal use by Colorado Santa Fe Real Estate, a company founded by a serial entrepreneur named Marcel Arsenault, one of the rising stars of the commercial real estate business.

Back in the late 1980s, Marcel was a hippy/entrepreneur in the Ben & Jerry mold who had spent the previous decade mixing up vats of Mountain High yogurt, eventually turning the brand into one of the most popular in the West and selling it Beatrice Foods for a nice profit. He then started buying up Colorado real estate. "I couldn't have picked a worse time," he says now. The junk bond implosion was metastasizing into the S&L collapse, and the value of office buildings and shopping malls was plunging.

But he held on, and in a couple of years was rewarded with the mother of all fire sales. The government began liquidating the assets it had acquired from failed thrifts, and prime properties were suddenly available for pennies on the dollar. Marcel loaded up on empty office buildings and leased them out for a fraction of the going rate -- possible because of the low purchase price. The buildings filled up, their values rose, and he leveraged their cash flow to buy more offices, shopping malls and condos. As western real estate values soared, so did Colorado Santa Fe's portfolio. It now manages upwards of $350 million of property and is sitting on well over $100 million of unrealized capital gains.

In other words, this is a guy who has prospered in both good and bad real estate markets, which makes his current take worth noting. And right now he's excited -- about the prospect of another 1990-style crash. Below are some excerpts from the previously mentioned report. The capitalized headings and italicized comments are mine, the rest is Marcel's. As your read this, keep in mind that it's the analysis of someone who for the past fifteen years has been very successfully LONG real estate.

THE BIG PICTURE

We believe that the apparent 'irrational exuberance' in the real estate market is, in reality, an asset bubble that has been inflated by a flood of capital attracted to real estate. The effect of this flood has been to drive down yields and push up prices. We believe this value trend is unsustainable and that we are at a crucial inflection point. Based on the analysis detailed below, we believe that cap rates will inevitably rise back to trend (and possibly overshoot), thus driving values down dramatically.

HOW WE GOT HERE

Phase I: Stimulus through Monetary Easing. Following the recession and 9-11, the U.S. Federal Reserve implemented monetary easing to a degree not seen in almost 50 years. Cheap money and credit flooded the U.S. economy in an effort to prevent a serious recession (which had the risk of turning deflationary like Japan's). The lax monetary policy had the intended effect of stimulating consumer spending (particularly on assets like homes and real estate).

Phase II: Illusion Becomes Reality. By 2003, prices of real estate began rising faster than the rate of inflation. In effect, investors began noticing how "profitable" it was to accumulate real assets. Rising prices created a "virtuous cycle" whereby more and more buyers participated in the equation of purchasing real estate. While admittedly rising prices were driving down yields, few cared about yield because the Fed was not rewarding saving. The preferred game was appreciation.

Phase III: Lenders "Pile In" (the final period of play). Given a few years of rising prices, real estate began looking very safe; low rates made the cost of debt very manageable, justifying higher prices and larger loans. By 2005 real estate lending was extraordinarily competitive, (after all, default rates were at historic lows). By 2006, cheap and easy mortgages had grown to epic proportions throughout the real estate industry. "No money down" became the way to purchase a home. Foreign and hedge fund capital poured into mortgage markets chasing yields of the "risky" tranches of mortgage paper (why settle for the 5% yield of "A tranche" if the risky "B tranche" yielded at 8-10%?) With rising property values, the "B tranches" were soon re-rated to "A", rewarding the buyers with phenomenal appreciation in their mortgage paper. Mortgages become more plentiful and the tide of easy money rises into uncharted territory, and bringing real estate values even closer to rocky shores hidden beneath a tidal flood.

Phase IV: Inflection Point Achieved (the cost of money rises). Satisfied that it had prevented a serious deflationary recession, by June 2004 the Federal Reserve begins to slowly increase rates. By 2006, the Fed Rate had increased from 1% to 4.5% (the "neutral rate" - not deemed excessively simulative by economists). With yields this high, it again makes sense to hold cash at the bank. By 2006, the cost of mortgage debt is returning to the long term average.

THE NEXT FEW YEARS

Phase V: - The Future: Look Out Below. The problem becomes obvious and virulent when real estate values begin to fall. With debt service costs rising, real estate begins to flounder, and more risky real estate ends up on the rocks. As default rates rise, mortgages slowly become more expensive and difficult to obtain ("real estate becomes a four letter word" in the parlance of an old banker). Only brave and knowledgeable entrepreneurs venture onto the scene of real estate wreckage at the lowest tide. Only a "foolhardy lender" would venture between the rocks of the now quiet ebb tide.

The "virtuous cycle" has completed its turn into the "vicious cycle."

HOUSING AND CONSUMER SPENDING

It is our view that the "irrational exuberance" has transferred from stocks to housing, setting up conditions for a "housing deflation." We expect a serious fall-off of home construction, sales and values, starting in 2006, and becoming very pronounced by 2007. A glut of new houses will accumulate in the next 12-24 months, causing a drop in price and construction of new units, and setting up a serious risk of price decline (similar to the "tech wreck" in the stock market).



With the costs of debt service so low, buyers have been able to pay ever higher prices while maintaining low monthly mortgage payments. In a "virtuous cycle," this has helped continue to push up housing demand beyond supply for several years (2002 through 2005). As a result, prices surged higher, and contributed to a pervasive "wealth effect." Booming housing prices (and sales) have created a boom in allied industries, including mortgage brokerage, retail sales for furniture, appliances and home improvements, magnifying the boom throughout the economy. This spending, in turn, has put off any serious recession. More importantly, the cocktail of low interest rates and rising home values has dramatically stimulated retail consumer spending. However, with interest rates now rising, households are left with an almost unprecedented negative savings rate, and dangerously high debt levels and debt service costs. The economy hinges on housing.

Implication: Based on the speculative excess we have observed, we believe this housing boom will almost certainly be followed by a long and painful housing bust. We expect that a continued rise in interest rate spreads and decline in housing sales and prices will push the U.S. in recession by late 2006, and this recession will deepen in 2007, as the housing "wealth effect" turns into a "poverty effect." As defaults accelerate, lenders' underwriting will tighten significantly, leading to a precipitous drop in new home sales.

Builders have slowly accumulated large positions in land (2-5 years of inventory), and will be anxious to turn land into cash (even at a loss). Earnings for the home builder industry will go negative, along with earnings in many allied industries (mortgage brokers, title companies, lenders, construction companies, etc.) This housing downturn will ripple through the economy, creating a loss of 2-4 million jobs (10-20% of the employment in construction and housing-related industries).

On the heels of the housing downturn will come a downturn in consumer spending, particularly in housing-related retail sectors (home improvement items, furniture and appliances, etc.). This will happen because variable mortgage rates are rising, fuel costs stay high, and the "wealth effect" of the last 10 years quickly turns into a "poverty effect," forcing the personal savings rate quickly back up to at least the U.S. long term trend of 7.1%. With stocks and housing giving back the "asset bubble" appreciation, the consumer has no choice but to resort to savings (as they have in the past and as they do in all other countries once the "asset bubble" turns into an "asset bust").

As savings returns to trendline, our projections show a drop of 3.7% in consumer spending by the end of 2007 in real dollars. The US economy will, along with the drop in residential investment, shrink real GDP by 3.1% (a fairly serious recession). With housing and consumer spending both going down, business investment spending may also contract, causing declines in the stock market, possibly driving the economy deeper into recession (until the imbalances are corrected). The resulting recession will be longer and deeper than most, likely lasting 3 years.

The rising federal deficit, economic recession, lower interest rates, and declines in real estate will all lead to substantial downward pressure on the US dollar. Falling U.S interest rates will chase out investors, weakening relative demand for the dollar. If the economy experiences an asset deflation recession, the dollar could sink for a period of 3-5 years, reaching new lows year after year.

COLORADO SANTA FE'S ACTION PLAN

There is virtually no upside left, and instead, tremendous downside risk. There will be a significant "flight to quality" by lenders and investors. The risk of remaining heavily invested in real estate is extremely high. Values are far more likely to fall precipitously than to rise modestly. Most real estate should therefore be sold and the extraordinary profits harvested. If our projections are wrong, we have avoided risk and locked in small returns from holding cash. If our projections are correct, we will need cash in 2007 and 2008 for the considerable buying opportunities that may be available at the bottom of the cycle.

2006 and 2007: Sell most existing properties:
? Quickly liquidate condo conversions ($75 million)
? Liquidate most retail and industrial properties ($200 million)
? Short stocks of retail REITs, homebuilders, real estate companies, mortgage insurance companies, and suppliers (construction, copper).

2008-2010: Return to Real Estate (at Cycle Bottom):
? Raise equity pool of $250 million and buy distressed property on a massive scale ($1 billion).

Now here's what makes this really interesting: Instead of just taking some well-earned profits, Colorado Santa Fe is both lightening up and going short. In effect, it's morphing from a real estate developer (which buys and operates, always on the long side), into a hedge fund, capable of going both long and short with outside investors' money. That's a very big change in mindset, hard to pull off but exactly the right approach for what's coming. "I'm an adept buyer," says Marcel. "Now it's time to become an adept seller."

 

[Engineer]

Farewell to flippers?

 

[LegendKiller]

Originally posted by: Engineer
Look out below....

[/quote]


I have said much the same thing for many months now. People look at housing in isolation, as if it were a boom and bust in a vacuum of the economy. However, they fail to see the far-reaching implications of weath erasure as prices go down, fiascal irresponsibility amplified by such effects, and the entire feedback loop amplified by a rapidly decreasing economy.

I have often described the housing bubble as a pebble starting a massive snowball and then avalanche, all it needs is the right snow conditions and that pebble and the entire side of the mountain will come crashing down as that snowball gains momentum, grows larger, and causes a general slide.

One wonders if the Republicans precipitated this by using bankruptcy reform, continual aggressive economic outlooks, continual aggressive deficit spending, in order to cause a fall, blame it on the democrats, and then sweep in at 2012 to take a seat of ultimate Republican power after discrediting the democrats with having caused yet another massive economic failure.

 

[jlmadyson]

'Overpriced' housing gets more overpriced

Despite a slowdown, more housing markets are overvalued than ever, says one economist.

NEW YORK (CNNMoney.com) - The rich have gotten richer, at least when it comes to home prices, according to a study released Monday.

The most overvalued housing markets in the United States recorded much higher price increases during the first quarter of 2006 than the least overvalued markets, according to the latest analysis by National City Corp, a financial holding company, and Global Insight, a financial information provider.

Worst prices
Where the home prices are least affordable

Metro area Percent overvalued Q4 2005 Median home price Q1 2006 Percent overvalued Q1 2006
Naples, FL 93.5% $383,000 102.6%
Salinas, CA 81.4% $608,600 79.1%
Port St. Lucie, FL 72.8% $240,800 77.4%
Merced CA 72.9% $291,300 77.0%
Bend, OR 65.2% $276,100 76.4%


Source: National City Corp


Best buys
The markets where houses are least overpriced

Metro area Percent undervalued Q4 2005 Median price Q1 2006 Percent undervalued Q1 2006
College Station, TX 22.1% $94,200 23.7%
Dallas, TX 18.8% $129,000 18.9%
Ft. Worth, TX 17.6% $105,500 18.5%
Houston , TX 16.6% $110,600 15.8%
Killeen, TX 11.7% $93,000 15.1%


Source: National City Corp


In the 50 most overvalued markets, prices increased 2.5 percent from the fourth quarter to the first, an annualized rate of 10.1 percent. In the 50 least overvalued markets, prices increased just 0.7 percent, an annualized rate of 2.7 percent.

Overall, U.S. home prices rose at an annualized rate of 7.3 percent for the quarter.

The report surveyed the largest 317 U.S. real estate markets. It determined what home prices should be, controlling for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts.

Markets with valuation premiums above 34 percent were judged to be severely overpriced and at risk for price corrections.

Take Naples, Florida, the most overvalued U.S. market by National City's estimate. By the last quarter of 2005, the median price for a home, at $367,200, was about 94 percent over what National City judged it should be.

But by the end of the first quarter, the median home price in Naples was $383,000, an increase of more than four percent in just three months. Naples real estate now sells for more than double what it should cost.

Compare that to the least overvalued market, College Station, Texas, where prices are more than 23 percent below what National City estimates they should be. Despite that, prices still fell last quarter, from $95,000 to $94,200. Ft. Worth and Killeen, Texas, and Wichita, Kansas, are other very undervalued markets where prices declined.

Port St Lucie, Florida, Merced, California, and Bend, Oregon, joined Naples as overpriced cities where prices rose substantially.

Some places, of course, bucked this national trend. Salinas, Santa Barbara and Sacramento, all in California, are all among the top 50 overvalued cities where prices dropped.

And El Paso, Houston and New Orleans, all among the least overvalued cities, reported substantial price appreciation. El Paso prices sprouted at a rate of nearly 25 percent on an annual basis.

According to Richard DeKaser, National City's chief economist, what usually happens when markets are returning to normal is that extremes of the market - the low and high ends, should move back toward the average; overvalued markets should rise slowly, if at all, and undervalued ones should shoot up.

Just the opposite is happening.

Overall, 39 percent of the 317 markets surveyed were judged to be severely overvalued. That's up from 36 percent of markets in the last quarter of 2005.

DeKaser did find some evidence that prices may be ripe for a correction. A year ago prices in overvalued markets were going up even quicker than they are today, indicating they are pointing to a change of direction. That doesn't mean that a normal, balanced market is right at hand.

"We've got a long way to go before we're out of this market," says DeKaser.

 

[jlmadyson]

Housing boom will not end in a crash, says Harvard

Markets seldom disappoint both bulls and bears for long. But over the coming years the US housing market looks likely to do just that, according to a study by Harvard University.

After the slump of the early 1990s and the surge of the past five years, the housing market might prove an anti-climax to all concerned. The long period of stagnation forecast by the survey would disappoint home-owners who expect big price rises but also those who missed the boat and have been hoping for a crash.

Recent investing newsAt Forbes: The Ultimate Summer InternshipsAt Forbes: Pensions Sue Samenuk's McAfee, Others On Options TimingMySpace May Be Linked With Search EnginesYahoo Says E-Mail Worm Now ContainedCuban to Finance Stock-Fraud Web Site
"Although housing prices are stretched, it is hard to see the catalyst for a crisis in the market," says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. "The overvaluation looks pretty well balanced by longer term supports for house prices, so we may just see a few years with little action. Houses will revert to being something to live in rather than money makers."

The study begins with some sobering observations about the record run in the US housing market. Over the past five years house prices have outstripped income growth more than sixfold ? the median home now costs more than four times median household income in 49 out of 145 metropolitan areas in the US, a record. In 14 metropolitan areas, the median house is now worth more than six times median income. Last year saw the average house price shoot up 9.4 per cent ? the biggest rise in the average house price since records started more than 40 years ago.

Financial strains on US home-owners have been mounting. The number of Americans devoting more than half of their incomes to housing climbed by 1.9m to 15.6m in the three years to 2004.

To bridge the gap between sluggish earnings growth and speedy house price growth, ever more Americans have been tempted by riskier flexible-rate mortgage products. More than a third of loans last year were at adjustable rates and may rebound on their holders if interest rates continue to climb. Even more reckless buyers, about 10 per cent last year, opted for payment-option mortgages ? which do not require full payment of the interest costs.

So why will non-home-owners be deprived of the crash they have been waiting for?

The strongest underlying support for the market comes from accelerating household formation. Demand is being driven not only by population growth but by household fragmentation, as couples divorce or children leave home.

Immigration has been a still stronger force ? over the past decade 12.6m new households were formed in the US. Over the next 10 years the pace of household formation will accelerate to 14.6m, according to the Joint Center for Housing Studies.

"Even if America decided to close the borders now, we would still see the lagged effects of previous waves of immigration," said Mr Retsinas. "Many of those that came to America earlier are only now in a position to buy property. As it is, we don't believe there will be any slowdown in immigration."

The Harvard study also argues that there are fewer points of vulnerability than during previous housing market downturns. The macroeconomic outlook for the US is uncertain but no mainstream economists are predicting the kind of surge in unemployment or leap in interest rates that would prick the housing bubble. In spite of the shift towards flexible rate mortgages, 75 per cent of mortgage holders have 30-year fixed rate loans and are therefore largely invulnerable to rising rates. A third of households own their homes outright.

Nor are manylikely to suffer from negative equity should rising interest rates or unemployment drive up defaults ? about 94 per cent of home-owners have equity of more than 10 per cent.

Over-development has also been less of a problem than in the past, the study says. Price declines associated with episodes of big job losses alone average 4.5 per cent, while those occurring around periods of over-building alone average 8.3 per cent, it says.

Not everyone concurs, however. Many economists say national figures are deceptive, since they obscure pockets of extreme over-valuation in property prices and greater vulnerability to rising rates. Others point to evidence of overbuilding in recent years. Residential investment has risen to 6 per cent of gross domestic product ? its highest level in 50 years and much higher than the average of 4.75 per cent.

The Harvard study concedes that even a slowing housing market could take a heavy toll on growth, as Americans become less able to use their houses as ATM machines and less employment is created by homebuilding. Provided the slowdown is gradual, as Harvard expects, this could help rebalance the US economy, reducing demand for imports and so stemming the growth of the trade deficit.

 

[Slew Foot]

That Harvard group is ridiculous. If you look at who's in it, its a bunch of homebuilders, banks, mortgage firms, and hardware and furniture companies. Liek they're unbiased .

 

[conjur]

Rents up 0.6% as housing slows
http://www.marketwatch.com/News/Story/S...07%2DDF205AFC7C29%7D&siteid=mktw&dist=

 

[LegendKiller]

Originally posted by: Slew Foot
That Harvard group is ridiculous. If you look at who's in it, its a bunch of homebuilders, banks, mortgage firms, and hardware and furniture companies. Liek they're unbiased .

This is a very good point. So many people swallow what the mortgage or real estate industry says. They say "Well, they are the experts". Yeah, they are the experts at keeping the money in *THEIR* Pockets, they have no interest in fair play or disclosures. They will always project the world through a lovely rose colored projector, all the while urging people to keep buying.

Why listen to the people who have the greatest interest and will reap the biggest profit? Especially when the code of ethics for that profession is horrible.

Letting the wolves watch the henhouse...

 

[dullard]

Originally posted by: Slew Foot
That Harvard group is ridiculous. If you look at who's in it, its a bunch of homebuilders, banks, mortgage firms, and hardware and furniture companies. Liek they're unbiased .

The bias doesn't bother me. Any opinion article will have bias. What bothers me is that they say information that they know will be used improperly. They say housing won't crash nationally so everyone thinks it won't crash in their location. That is false. Prices are falling in a few local areas. I expect that to be true in more local areas as time goes on. Basing local-only decisions on national data is wrong on so many levels. That is like the poorest families making their purchasing based on the national average income, and ignoring what their bank account says.

 

[dullard]

Originally posted by: conjur
Rents up 0.6% as housing slows
http://www.marketwatch.com/News/Story/S...07%2DDF205AFC7C29%7D&siteid=mktw&dist=

As was predicted. As housing prices slow their growth rates, rents will soar. They move at opposite times.

 

[Slew Foot]

Originally posted by: dullard

Originally posted by: conjur
Rents up 0.6% as housing slows
http://www.marketwatch.com/News/Story/S...07%2DDF205AFC7C29%7D&siteid=mktw&dist=

As was predicted. As housing prices slow their growth rates, rents will soar. They move at opposite times.

That tends to be true, I think it might be more muted this time though, since much of the boom in housing was based on second homes or vacation condos. If the flippers cant dump them they may rent them out which could lead to a glut of rental units available. Will it be enough to keep up with the new rental demand? That I cant predict.


EDIT: A side effect of rising rents is that the CPI is currently based off the amount it costs to RENT a place, not buy. Thus rising rates will produce more upward pressure on interest rates and thus, possibly downward pressure on home prices. My guess is that an equilibrium point will be reached when the cost to rent=the cost to own (roughly).

 

[dullard]

Housing starts up to 1.96M. But permits down to lowest since 2003. The permits down probably match yesterday's plummetting in the builder confidence.

 

[Slew Foot]

They're building em, but they cant sell em. This justs adds to the existing inventory and will eventually drive prices down.

 

[jlmadyson]

New home sales rise 4.6 percent in May

WASHINGTON (Reuters) - Sales of new U.S. homes again defied predictions of a slowdown in May and rose 4.6 percent, but median sales prices fell and the U.S. Northeast experienced its slowest sales tempo in nearly two years, according to a government report on Monday.

The pace of new home sales rose to a seasonally adjusted 1.234 million unit annual rate from a downwardly revised 1.180 million unit pace in April, the Commerce Department said.

Economists polled by Reuters were expecting sales of new homes to slow in May to a 1.150 million unit pace from an originally reported 1.198 million unit rate in April. The March sales pace also was revised downward to 1.114 million unit rate from a previously reported 1.142 million pace.

Compared with a year earlier, the May sales pace was down 5.9 percent.

Median selling prices fell 4.3 percent from April to $235,300, a figure that was still 3.1 percent above the year-ago median price of $228,300.

The closely watched supply of new homes for sale at the end of May fell 0.7 percent to 556,000, from a downwardly revised 560,000 in April, which was a record level.

The homes for sale figure represented a 5.5 months' supply at the current sales pace, compared to a 5.8 months' inventory in April.

May new single-family home sales in the U.S. Northeast fell 7.9 percent to an annual pace of 58,000, the slowest rate since July 2004. In the South, sales climbed 6.0 percent to an annual rate of 669,000 units while in the West, sales rose 5.3 percent to a pace of 317,000 units. In the Midwest, sales edged up 2.7 percent to a pace of 190,000 units.

 

[Engineer]

New home sales jump unexpectedly by 4.6% in May while median price falls by 4.3%

 

[dullard]

Edited out. It's not worth it.

 

[jlmadyson]

Originally posted by: dullard

Originally posted by: jlmadyson
New home sales rise 4.6 percent in May

I like how you cherry pick data. Let me cherry pick too:

[*]median sales prices fell
[*]the U.S. Northeast experienced its slowest sales tempo in nearly two years...new single-family homes fell 7.9 percent to an annual pace of 58,000, the slowest rate since July 2004
[*]Compared with a year earlier, the May sales pace was down 5.9 percent.

Funny I have 2/3 highlighted, keep your troll posts coming though. Since you seem to do the very thing you are trying to call me out on, here is some more for you since you're so good at it.

In the South, sales climbed 6.0 percent to an annual rate of 669,000 units while in the West, sales rose 5.3 percent to a pace of 317,000 units. In the Midwest, sales edged up 2.7 percent to a pace of 190,000 units.

 

[dullard]

Edited out. It's not worth it.

 

[jlmadyson]

Originally posted by: dullard

Originally posted by: jlmadyson
Funny I have 2/3 highlighted, keep your troll posts coming though.

Hey, it wasn't highlighted until you edited. And I said I LIKED how you did it.

Hmm, well it seems like you were calling me out for cherry picking. As I highlighted some of the more important data for the month, both positive as well as negative data before you had posted. I'm not sure how one cherry picks an article if I had nothing highlighted at the time you read it. Nevertheless, a so so month.

 

[dullard]

Edited out. It's not worth it.

 

[jlmadyson]

Originally posted by: dullard

Originally posted by: jlmadyson
I'm not sure how one cherry picks an article if I had nothing highlighted at the time you read it. Nevertheless, a so so month.

Based on your past posts and based on the part I quoted from you (only mentioning the new home sales increase). If someone can cherry pick and put together a coherent and consistant argument, then it makes for a fun debate.

Well considering that is the title of the article one, which I almost always use, two, both positive and negative data was highlighted, and three, was also there to read clearly before I edited, I'm not sure there is much of any debate. If you scroll back a page you will see this article from me as well, using the same format and I certainly don't recall you calling me out for cherry picking on this title either, hmm yea;

Existing home sales fall 2% to 6.76 million in April

 

[cliftonite]

New home sales down 5.9%

May Year-Over-Year Sales
United States -5.9%
Northeast -36.3%
Midwest -20.8%
South 8.4%
West -12.7%

The May median sales price of $235,300 is down approximately 6% from the peak price of $250,800 set in February of this year and is down 4.3% from last month.

 

[Engineer]

Originally posted by: cliftonite
New home sales down 5.9%

May Year-Over-Year Sales
United States -5.9%
Northeast -36.3%
Midwest -20.8%
South 8.4%
West -12.7%

The May median sales price of $235,300 is down approximately 6% from the peak price of $250,800 set in February of this year and is down 4.3% from last month.

There must be a ton of houses in the South selling to cancel out those LARGE negatives from the rest of the country and turn them to a much smaller -5.9% US average (unless there is something missing from the above numbers)?

 

[dullard]

Originally posted by: Engineer
There must be a ton of houses in the South selling to cancel out those LARGE negatives from the rest of the country

I haven't looked too much into those numbers, but they are new home sales only. New home construction in the south was big due to the hurricanes last year. Those homes should be finishing construction now. Thus, I assume new home sales will be temporarilly biased with heavy sales in the South. That is just my estimate. If you want, you can look up the regional new home sales info and confirm or deny my estimate.