February 27, 2006

Number of Unsold Homes Hits Record High

So many homes - old ones and new ones - coming on market - at the EXACT wrong time

Number of Unsold Homes Hits Record High in January, Shows That Market May Be Cooling

The backlog of unsold new homes reached a record level last month, as sales slipped despite the warmest January in more than 100 years.

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 the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000.

Analysts viewed the new data as further evidence that the nation's red-hot housing market, which hit record sales levels for five straight years, has definitely started to cool.

"The decline in new home sales in January makes it clear that there is some real softening in the housing market, said Joel Naroff, chief economist at Naroff Economic Advisors.

The 5 percent decline was bigger than expected, dashing hopes that the milder-than-normal January would help to bolster demand. The warm weather had pushed up the level of construction starts last month by 14.5 percent, the fastest rate in three decades.

But the new report showed that with sales lagging, the increase in building activity left a total of 528,000 new homes still for sale at the end of the month, a nine-year high.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted "real downward pressure on prices over the next few months."


cereal said...

something biblical is about to happen to the housing market.

and i don't mean rising from the dead

skytrekker said...

Shepherdson predicted in October what is happening right now. He said by mid summer 'A Meltdown' would begin and things would soon 'become ugly'. Only a few others have had the balls to say this.....the rest of those wall street 'prostitutes' will be in the dark, clowns like Peter Cardillo, Art Hogan and last but not least Ned Riley and Joe Batipaglia---- until the DOW falls 300-400 points in a day.

Tom DC/VA said...

Wait until all those extra January construction starts hit the market in July and August. Whoa, Nelly!

Anonymous said...

Media coverage of the housing situation is gong to have a HUGE effect on market psychology. Media has spurred the housing bubble (as it did the stock market bubble) and it will work the same way on the way down. If people hear reports of a weak housing market, and talk of a "meltdown" or a "bursting bubble" their expectations will change quickly from one of rising prices to falling prices. Sellers will be made to feel vulnerable and buyers powerful -- a quickl flip of the past situation. This all seems obvious, I know, but when it happens it will happen quickly.

That is why I have been very interested to see national news coverage of the housing situation. I think a lot of the big media outlets (New York Times, CNN, etc) have been reluctant to do stories on a "bursting bubble" because so many past predictions of a meltdown have been proven wrong (i.e. premature). Now the editorial mood is to wait for strong confirmation before reporting the story.

For this reason, I think the NY Times story today (also CNN and others) on the government stats on house sales is important. It is the first story in a while on this subject. If the stats continue to show the same downward trend in sales and then prices, the stories will get more frequent and the theme of a crashing market will get stronger and more pronounced. This will change psychology quickly. Interesting to see realtors blaming media -- they know what affects market psychology and they see the media coverage as a threat to their gravy train. They are right; no one will listen to their complaints because they benefitted from media's sensational coverage of a surging home market for the past 5 yrs.

Live by the sword, die when the sword gets shoved 5 feet up your ass.

Smart Grid blogger said...

i like this word " UPSIDE-DOWN-MORTGAGE "

which means paying for an inflated house price with a declining value... or it means the house had NEGATIVE HOME EQUITY VALUE

Anonymous said...

Don't worry, don't panic, be happy. Our friends at the TOP have a solution for all these ills:

The 100 year, interest only mortgage! Refi now!

Think I'm joking? Just watch the circus in DC as Congress works to avert a housing markket melt-down.

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