No surprises... except the absolute devastation in the Northeast numbers...
Bigger-Than-Expected Drop in New Home Sales Indicates Five-Year Housing Boom Is Slowing
WASHINGTON (AP) -- Sales of new homes fell for the second time in three months in January, providing further evidence that the nation's five-year housing boom is slowing.
The Commerce Department reported Monday that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.
That was a bigger drop than analysts had been expecting and provided support to the view that the housing market, after setting sales records for five straight years, is slowing under the impact of rising mortgage rates.
The biggest decline was a 14.9 percent decrease in sales in the Northeast, which followed an even bigger 23 percent plunge in sales in December. Sales in the Midwest were down 10.8 percent after having risen by 21.2 percent in December. Sales fell by 10.3 percent in the South in January following a 1.2 percent gain in December. Bucking the national trend, sales in the West posted an 11.3 percent increase in January after a 6.3 percent gain in December.
Some economists have expressed concerns that once home sales start to slow, the big price increases of recent years could turn into sharp declines in a similar pattern to how the speculative bubble in stocks burst in 2000.
February 27, 2006
Home sales data out - it's a long, long way down (and here we go)
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11 comments:
Let me get this right, a 15% declaine in new home sales in the North East means that for every 100 houses that were sold last month, only 85 were sold this month.
This is not saying that housing prices came down one dollar, this is saying that even though there are far more houses on the market, fewer houses are being sold.
I think this is a warning sign of a comming crash and not the begining of an actual crash.
I mean, all you have to do is check out Zillow.com to see how home values are still moving up 15 and 20 thousand dollars a month!
Lets say I have a franklin mint commemorative eagle paperweight. I say it is worth $10,000,000. Of course I don't have any buyers and there are thousands of folks willing to sell you the same item for a buck, but nevertheless I know it is worth that much!
My point is, regardless of whether a valuation is from zillow, your bank, your local appraiser, or your bartender; if there are no buyers, the valuation is worthless!
i think zillow's numbers are a bit optimistic. I sold my condo in September, and Z says the value of my former unit went up about 5% since then, when in actually asking prices for identical units in the building have remained the same (no new sales reported in the building and the number of listings is about the same)
Right; the value of an asset is what someone else will pay for it. My 1965 Ford Mustang is worth $30k to me but if someone would only pay me $5k then that's the true value.
I'm tired of hearing the "soft landing" phrase.
Why isn't there an honest discussion about what could happen to the economy. I would like my paycheck to rise 10% this year but realistically I'll be lucky to get 3%. Burying our heads in the sand and hoping the hurricane turns doesn't mean it didn't exist.
There should be planning TODAY to recover the economy from the bust that is coming from housing.
My house was and still is valued over $525k appraisal and zillow. It sat on the market for over a year. It is only worth what someone will pay for it....who cares what someone says it is worth. I would have loved to get 525k, let's just say that after a year, I took an offer for a whole lot less and got out while I could.
Don't worry. These are numbers on 'new' houses *****NOT***** existing homes. Homeowners (like me) own existing homes, so nothing to worry about.
the thinker has a good point. We bubble believers are maybe jumping the gun a little. Lower sales are a very bad sign for the real estate market but they are not in themselves price declines. Yes, there is a very powerful thesis that price declines must follow (glut of supply; basic economics), however, there was a similar decline in sales in early 2003 and we all knew what happened after that -- to the moon Alice.
I think we'll start to see confirmation in the form of significant dcelines in prices, yr over yr, by late spring. Until then, we won't have convinced the world that a meltdown is underway.
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