No discussion on housing sales rising?

[Spartacus]

more appropriate thread in housing bubble forum - moving there myself

http://www.itulip.com/forums/showthr...0670#post10670


Where would the money/credit to do these sales be coming from?

I personally did not think this level of sales would happen at only an 11% discount from peak.

Are breakdowns available by what portions of the market sold?

Perhaps this is the reification of Dr. Hudson's thesis that the rich will sell but the poor will be locked into declining prices for a decade.

Although the 11% price drop argues it's not only the higher-price houses that sold, because the prediction was the overall average sales price would seem to increase as the higher price houses selling skew the data.

[metalman]

Re: No discussion on housing sales rising?

isn't this folks who bought early locking in remaining profits before prices fall further and folks selling at a loss who can afford to? leaves the folks who bought too late or who can't sell at a loss...

[Mega]

Re: No discussion on housing sales rising?

As with anything one months data is simply no good. Year to Year data tells you more.
Mega

[grapejelly]

Re: No discussion on housing sales rising?

prices declined according to this report by 11%, which means more like 20% when you take into account non-cash rebates and incentives. It's a huge drop in price.

I'm also not sure how reliable this report is in any meaningful way because of the historical inaccuracies regarding cancellations.

I do detect that there has been a bounce in my neck of the woods. I realize the housing market like every other market works in waves and wavelets and we have been on a counter-cyclical wave for a few months.

[oddlots]

Re: No discussion on housing sales rising?

One thing worth noting is that - according to Mish Shedlock - the data has an accuracy of + / - 13 %. Ritholtz had a good piece on it:

As we wait for the 10:00 am Existing Home Sales Data (I will be on the beach by then) let's have yet another look at the New Homes numbers from yesterday.

Last night, Larry derided our very straight forward analysis of New Home Sales as "tortured logic." As noted yesterday, Homes are not impulse purchases, and double digit single month gains are highly aberrational, typically followed by mean reversion.

If that analysis is not to your taste, consider these other factors:

• The 16.2% jump in April sales was the biggest in 14 years -- as Bill King noted, that should’ve triggered warning bells immediately.

• The rise in sales were due mostly to a "35% surge in ‘homes not yet started.’ Completed home sales were virtually unchanged m/m (31k from 30k).

• About 2/3 of April sales were for homes priced under $300,000.

King's most damning observation about April's New Home Sales data is based on the most recent few years of April data: They ALL have all been dramatically revised downwards:

-April 2006 New Home Sales were initially reported as +4.9%, but were later revised to a
DECLINE of 2.6%.

-April 2005 was initially reported as +0.2% but was later revised to a DECLINE of 5.1%.

And finally, King asks, "How is it that the ‘bad weather’ that diminished retails sales did not affect new home sales?"

I think we already know the answer to that one . . .

And:

Commerce Department reported that April new-home sales jumped an unexpected 16.2% -- the biggest monthly gain in 14 years. The year over year drop in sales change was a drop of 10.6%.

By no coincidence, the median home price dropped a 11.1% from the prior month -- the largest amount on record. The big price decline implies that builders are slashing prices to move the huge overhang of unsold inventory. Inventory of unsold new homes fell to 6.5 months (seasonally adjusted) from 8.1.

Regional sales were even more telling. As we noted earlier in the week, the greater NY region (and NYC Condo/Coop sales) are skewing the national data. Year-over-year sales in the Northeast surged 43.1%; sales were down 28.1% in the Midwest, and 25.4% in the West. Sales fell marginally (3.4%) in the South.
~~~

In the past, we have cautioned that double digit gains of new home sales are VERY unreliable monthly data points. (It is mostly due to the way the Builders self report their sales to Commerce).

Have a look at this analysis we did a few years ago: It turns out that whenever New Home Sales jump double digits, it usually reflects a mean reversion from the prior (or subsequent) month's reportage. Indeed, over the past 15 years of data, we found that a mean regression followed nearly every double digit monthly gains. Typically, the subsequent month's data was significantly lowered -- flat to negative in nearly every case:

In other words, stick with the two or three month average.