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New House Sales Turn Negative Year-Over-Year, First Time Since 2011
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2014 Mar 25, 6:55am 1,740 views 4 comments
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hanera
2014 Mar 25, 8:35am
The best analogy I can think of is the super low financing GM offered in the years before they collapsed. I don't know if you remember, but a few years before they went under they were offering 0% financing for 60 months (maybe 72). It was crazy. They pulled their future pipeline of buyers into the present at an unsustainable rate; a few years later they had no more buyers. A similar thing is going on here in my opinion.
There are only so many qualified buyers who want houses, and the super low rates over the past few years enticed them in; the finale was last summer with the 100bps move up that became a frenzy in some markets; it pulled people off the fence. Now the pipeline is dry and the rates are going up. Tough times for Real Estate are in store.
Interesting analogy. Ain't going to happen to tech hubs where demand by tech employees and newly minted tycoons are real.
New Renter
2014 Mar 25, 10:13am
Interesting analogy. Ain't going to happen to tech hubs where demand by tech employees and newly minted tycoons are real.
In 2009 San Jose CA was a ghost town
No it was not, not by a long shot.
I have lived in San Jose for most of my life including throughout 2009. The economy was muted, there was noticeably less traffic during rush hour (not a bad thing) but ghost town? Hardly!
Now THIS is a California ghost town!
New Renter
2014 Mar 25, 10:55am
have lived in San Jose for most of my life including throughout 2009. The economy was muted, there was noticeably less traffic during rush hour (not a bad thing) but ghost town? Hardly!
I am referring to the commercial office space vacancy. Companies were closing and there was lots of empty office space.
Well those days are gone. I'm seeing lots of new construction but not much of it is residential :(
There is a large new shopping center being built on some of the old Cottle IBM land (do we really need more B&M retail?), and sports stadiums (Earthquakes soccer arena, yet another stupid waste of valuable space) but not that much residential housing yet.
hrhjuliet
2014 Mar 26, 3:21am
Commercial real estate is almost more insane than residential around here. Small businesses can't afford the shirt on their own back, due to tax laws harming them and helping the larger competition. Small businesses can barely last two years without debt. Unless they can court a corporation, good luck. It's no wonder we see so many empty buildings for sale and rent.
http://www.mortgagenewsdaily.com/03252014_new_home_sales.asp
Mar 25 2014, 10:56AM
After rising by a revised 3.2 percent January, New Home Sales fell 3.3 percent in February according to data released today by The Census Bureau and the Department of Housing and Urban Development. The annualized sales pace of 440k homes is the lowest since September 2013.
Perhaps more telling from a momentum standpoint, year-over-year sales (Feb 2014 vs Feb 2013 in this case) were negative for the first time since September 2011. At that time, annual momentum was in the process of improving, and the only other post-crisis move into negative territory came after the homebuyer tax credit expiration in 2010. That means today's data is the first move from an established positive trend into negative territory since 2006.
On a non-seasonally adjusted basis there were an estimated 35,000 homes sold during the month, leaving an unsold inventory of 189,000--slightly higher than January's revised 188,000 homes. Taken together with the slower rate of sales, The Census Bureau says this accounts for 5.2 months' supply of New Homes compared to a revised 5.0 months' supply in January (4.7 months before revisions).
The improvement in sales was driven entirely by activity in the Midwest where new homes sold at the rate of 67,000 units, up 36.7 percent from January and 1.5 percent above sales in February 2013. If that seems odd, don't worry... The month-over-month margin of error is only ±72.5 percent (meaning the 67k homes sold could really end up being anywhere from 18k - 115k). Strip out that sort of volatility and we're seeing a stagnant trend of 440k-460k in place since the beginning of 2013.
New Home Sales
While average prices continued higher thanks to high-end homes, median prices fell to $261.8k from $265.1 in Feb 2013. That's the first move into negative territory since mid 2012 and further evidence of the sideways grind. Other home price metrics out today spoke to January's data, but told a distinctly different story. The average year-over-year gain was 13.2 percent according to Case Shiller and 7.4 percent according to FHFA, Fannie and Freddie's regulator.
#housing