February 28, 2007

New homes supposedly plummet only 16.6%, real number is probably down 66.6%


Man, I sure wish we (and the market) had access to some real data, vs. the BS put out by the NAR and Commerce Department.

This new home survey is so worthless, I don't even know where to start. How they can put out a number with a straight face regarding new homes when they know damn straight (just read the homebuilder announcements) that cancellations are running 40% - 50%, yet this report just shows offers, not closed deals.

The price number is also laughable, knowing that builders are offering everything but the kitchen sink to sell dead inventory, but those discounts and incentives aren't recorded here.

At least the MSM is now talking about how laughable the data is (see below). But the headlines are still misleading at best. And today's new home report makes the NAR's report yesterday even more laughable and discredited. Americans, you're being misled, you're being lied to.

Here's your real headline, HP version:

NEW HOME SALES FALL OFF A CLIFF - DOWN 66.6%, REAL PRICES PLUNGE ANOTHER 20%. HUNDREDS OF THOUSANDS OF REIC JOBS DISAPPEAR, HOUSING CRASH OF EPIC AND HISTORIC PROPORTIONS IS UPON US

Instead, here's what the Commerce Department and MSM give us today:

New-home sales plunge 16.6% to 937,000 - Commerce Department reports biggest percentage drop in 13 years

Sales of new homes plunged 16.6% in January to a seasonally adjusted annual rate of 937,000, the Commerce Department reported Wednesday.

It was the lowest sales pace in four years, and was the biggest percentage decline in 13 years.
Sales were down 20.1% compared with January 2006.

The decline in sales was much sharper than expected. The median forecast of economists surveyed by MarketWatch was a drop to 1.08 million units, annualized. See Economic Calendar.

Home builders have piled on incentives, including offering free vacations and new cars, to sell homes and reduce inventories. Such incentives aren't subtracted from the sales price reported to the government.

Sales are reported when a contract is signed, not at the closing of the sale. Home builders have reported a large increase in cancellations in recent months. Cancellations aren't reflected in the government data, so the reported sales are probably overstated.

Update - I liked this analyst quote later today:

"Let's cut to the chase - these numbers were ugly," wrote Mike Larson, real estate analyst at Weiss Research in Jupiter., Fla. "While the month-to-month changes in new home sales figures can be volatile, the magnitude of the decline is impressive.

62 comments:

Anonymous said...

66.6% the sign of the beast!

uniball said...

Could you please explain exactly where you get the 66.6% number? The exact calculation, the exact data, or are you doing exactly what you accuse the NAR and the Commerce Department of doing: publishing bogus data?

"Americans, you're being misled, you're being lied to."

Yeah, but by whom?

Anonymous said...

Ken Fisher of Forbes: "You can see right through the housing crash story by looking at the prices of housing stocks…

In the last six months housing stocks are up 24%... If housing were destined to fall apart in 2007 these stocks wouldn't be so strong ...

decaffeinated said...

Even after that abysmal housing data report, the markets are still green (@ 11:46 ET). How stupid are Wall St. traders? I mean, umm, when the music stops for the housing market, the rest of the economy swirls down the toilet. Hello? Anybody home down there at the corner of Wall and Broad?

keith said...

"probably" I said - I have, nor does anyone have, the true figure.

But if you take the 16.6% printed which is made up only of signed contracts, subtract the 50% cancellations we're hearing from the builders, that's 66.6%. Plus I like that number - very symbolic wouldn't you say?

But to be clear - the number printed is misleading and bogus, and nobody really knows how many new homes sold. They know how many were ORDERED

http://tinyurl.com/39k3cp

KB Home said net orders fell 38% in the fourth quarter to 6,059 homes. Its cancellation rate for the latest quarter dropped to 48% from 53% in the third quarter. In the fourth quarter of 2005, the cancellation rate was 31%, the company said.

Anonymous said...

Gold is at $666 right now!

Anonymous said...

Can you believe businessweek calls this 'surprisingly strong' january home sales.

Blank stare, stunned, speechless.

Anonymous said...

First they find Jesus's tomb now the beast these are end times. Shit! I was due for a $0.25 raise too.

Anonymous said...

Countrywide Financial (CFC)

Ups from 1 STAR (strong sell) to 2 STARS (sell)

See all is better, you HP's are just a bunch of Rush Limbaugh fanatics.

38.29 +0.71 (1.89%) Feb 28 11:52am ET

I just made .71 you losers.

alan'sbuttboy said...

"How stupid are Wall St. traders? I mean, umm, when the music stops for the housing market, the rest of the economy swirls down the toilet. Hello? Anybody home down there at the corner of Wall and Broad?"

Here is all the explanation you need:

http://tinyurl.com/kh74j

The Fed is pumping money like there's no tomorrow (ha ha), and as long as that continues the money center banks can play their games and cover interest payments. They don't care about the problem subprime mortgages because most of the trash paper is held by foreign investors.

We now have the "real" economy of factories, housing contractors and small businesses, and the Wall Street paper economy of big banks, hedsge funds, large multinational corporations, and giant brokerages. Don't confuse the two.

Anonymous said...

$666 gold...WTF? About 3-4 months ago you paranoid freaks were predicting $1000 gold by now. What happened?

Anonymous said...

WCI- a fla, condo builder, ceo said in a conference call yesterday he blames 'negative media, and a lack of consumer confidence' for his companies dismal 4th quarter results.

And the anal-cysts believe he is right.

I have never seen such disconnect from reality and truth in my life.

And now I am beginning to understand how 59 million dumbasses voted for bush, and his coming up and personal scheitt sandwich... We as a nation are for the most part, a pile of conned sheeple wanting and needing for the elite to pull our strings irregardless of truth.

The conning gets so bad somedays I just want to puke in disgust.

ggecco said...

Can you be more ball-less and gutless than to post as anonymous on this thread about what trades you're making or where you think the market will go

Get on the damn record and get a user name pussies!

Anonymous said...

Keith, how old are you? And I'm not being facetious in asking. I ask because you sound like you've have never lived through a financial or housing downturn before.

This is not epic. It's not historical. It's something that happens every 15 years or so. You can set your watch to it.

Notice each of the numbers you refer to are the highest or lowest since less than 20 years ago, ie biggest sales decline in 13 years or foreclosures at the highest level since 1989. This should tell you that all of this has happened before. Been there, done that.

Anonymous said...

I don't care if the data bogus as long as it makes me feel good, this is America damn it, we always feel good.

Anonymous said...

uniball said...
Could you please explain exactly where you get the 66.6% number?

Here is data for Algonquin Il
Most of the homes there are new :

From Melissadata.com

01-2006 73 $289,000.00
12-2005 95 $298,000.00

01-2007 43 $275,000.00
12-2006 45 $315,000.00

As you see for Dec and Jan 06/07 sales are down 48 % and prices up 1%

Anonymous said...

"Let's cut to the chase - these numbers were ugly," wrote Mike Larson, real estate analyst at Weiss Research in Jupiter., Fla. "While the month-to-month changes in new home sales figures can be volatile, the magnitude of the decline is impressive"

http://money.cnn.com/2007/02/28/news/economy/newhome_sales/index.htm?postversion=2007022812

Anonymous said...

Chk also Plainfield Il 90% new homes:

01-2005 157 $258,000.00
12-2004 237 $263,000.00

01-2006 99 $261,000.00
12-2005 95 $269,000.00

01-2007 60 $300,000.00
12-2006 66 $280,000.00

sales are down 35 % from last year and whoping 76 % down from 2005

Anonymous said...

A White House spokesman told reporters yesterday that the PPT would be meeting. There is no doubt that the government is buying up stocks. I would also bet that many of the home sales recorded were bought by HUD for Section 8 tenants.

Freddie cut the legs out from under the subprime and alt-A market. Fannie Mae sees no problems with subprime, liar's loans, no-doc/no asset, 125% loans. Then again, Fannie has file with the SEC for 3 years.

Anonymous said...

People voted for Bush because the opponent was an even bigger dumbass who was propped up by the jackass party

Anonymous said...

"See all is better, you HP's are just a bunch of Rush Limbaugh fanatics."

Huh??? Limpbow is a big fat idiot. Hannity is a great american ass. And I consider myself a "conservative".

I'm really a constitutionalist libertarian. The repubs and demmies are both full of $hit. They are both gonna drive this bus over the cliff.

target4losers said...

You redneck toothless HP's losers shut up and go back to buying cheap chinese crap from Target

Anonymous said...

My zip code 89141:

It's in Las Vegas where new homes are being built of course. My home was built in 2001, and most of the area was built by 2005. There are a couple of new subdivisons being built but almost negligible as a % of the total zip code so the $75K of freebies from builders is not applicable.

Sales down, prices up in the past 6 months. Number of sales in Jan '07 was the same as Feb '06. Prices up YOY.

I'm not seeing a crash here folks.

02-2007 43 $463,000.00
01-2007 72 $447,000.00
12-2006 66 $429,000.00
11-2006 55 $451,000.00
10-2006 81 $419,000.00
09-2006 60 $440,000.00

02-2006 73 $437,000.00
02-2005 84 $446,000.00

Anonymous said...

``$666 gold...WTF? About 3-4 months ago you paranoid freaks were predicting $1000 gold by now. What happened?''

Perhaps reality intruded.

What we're facing is a credit crunch which causes assets (such as houses) to depreciate. Gold is also an asset and will likely depreciate with the rest of the market. Gold prices go up when there are inflationary pressures not deflationary pressures. It's also an awful long term investment. Gold prices today are about 20% lower than they were in 1980 in dollar terms. If adjusted for inflation then the price would be close to be $2150/oz in today's dollars in 1980. So, the current prices are 70% down since then. Stocks and bonds on the other hand have had a positive return even adjusting for inflation.

Short term, one can use it to hedge against inflation but that is pure speculation not investment. And there are better ways to hedge against inflation. One obvious example is loading up on debt and purchasing an asset that is likely to track inflation and generate cash flow (that tracks inflation as well) such as a rental building.

You can't have it both ways. You can't predict that housing prices will plummet and we will suffer hyper-inflation at the same time. House prices generally track inflation for various reasons, the most important of which is that rents are actually part of the inflation figures. Rents are what control the real value of investment property and hence when we have inflation: rent goes up and the value of property also goes up on average at the same rate.

I remain quite doubtful that the prices of gold and property do not have a strong correlation. In fact, we have had a runup in the values of both at the same time. Wouldn't that make one think that it'd be likely that there would be a crash at a similar time as well?

In times of a credit crunch, cash is king---not assets.

E said...

Big day for gold: First time ever for a closing above $666 on the last trading day of the month. Yeah, she'll reach $1000 - and that'll be just the warm up.

Anonymous said...

Have no fear, the PPT is here to save the day. With the stroke of a key, they will create $500 billion to buy stocks and keep the party going.

http://tinyurl.com/2xd3qs

Anonymous said...

Cancellations are not counted. More BS #'S!!!!

The whole system is corrupt. to many hands in your pocket to tell the truth.To many lifestyles at risk to tell the truth.
Protect yourself do not listen to the bs.

Anonymous said...

Keith, Dunno your email-

Awhile back somebody posted on one of your threads the following.
It was a long list of quotes from heavyweights in Govt and Finance saying things were OK and that current conditions would only get better. These were all qoutes from the early years of the great depression and of course things subsequently got alot worse.

Could you tell me where that thread is? Anyone who has quotes like these, please post! It's enlightening to compare these old quotes to those coming from the liars (Lereah, Bernanke, etc) of today.

Anonymous said...

Boston area saw a rise of 13% YOY (yes YOY not from Dec to Jan) in sales in January.

The number of single-family homes sold rose almost 13 percent in January compared to a year earlier, the first increase in the last 10 months, according to the monthly housing report released yesterday by the Massachusetts Association of Realtors. Sales were strongest on the South Shore of the Boston metropolitan area and on Cape Cod. The median price of a single-family home fell to $340,000, 2.4 percent lower than a year ago but virtually unchanged for the past four months.

Anonymous said...

Wow. First Bush caused 9/11. Then he caused Katrina. Now he's buying stocks and homes.

Damn for a complete imbecile he's sure capable of pulling a lot of levers.

You people don't really believe this right? I mean it's all fun to speculate and come up with crazy theories, but deep down nobody really believes this stuff...please for the love of god tell me nobody really believes this stuff!!

Uncle Al said...

...
In the mist, dark figures move and twist,
Was all this for real, or just some kind of hell.
666 the number of the beast.
Hell and fire was spawned to be released.

Torches blazed and sacred chants were praised,
As they start to cry, hands held to the sky.
In the night, the fires burning bright,
The ritual has begun, Satan's work is done.
666 the number of the beast.
Sacrifice is going on tonight.

This can't go on, I must inform the law.
Can this still be real or just some crazy dream.
But I feel drawn towards the chanting hordes,
They seem to mesmerize...can't avoid their eyes,
666 the number of the beast.
666 the one for you and me.

I'm coming back, I will return,
And I'll possess your body and I'll make you burn.
I have the fire, I have the force.
I have the power to make my evil take it's course.

Anonymous said...

"Kieth, how old are you?"

Well, gosh I can't speak for Kieth but I'm 48. I've been to Maine, Spain and Spokane and I ain't never seen sh@t like this before!

No, this is NOT something you can "set your watch to" unless of course you mean the unprecedented use of exotic loans and "2nd home" purchases?

I've lived through any number of economic cycles and trust me, this is news.

DinOR

showmethenouns said...

We as a nation are for the most part, a pile of conned sheeple wanting and needing for the elite to pull our strings irregardless of truth.

Amen brother, pull my string.

Anonymous said...

You can't have it both ways. You can't predict that housing prices will plummet and we will suffer hyper-inflation at the same time.

In HP land - where reters make $300K a year and are married to supermidels - anything is possible, even hyperinflation and a global depression occuring at the same time.

Anonymous said...
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Anonymous said...

No, this is NOT something you can "set your watch to" unless of course you mean the unprecedented use of exotic loans and "2nd home" purchases?

Yeah nobody owned vacation homes pre-2004. All those homes on the coast in CA, FL, NC, Cape Cod, Maine, Jersey Shore, Hamptons and all the ski chalets/condos in Aspen, Vail, Killington, Lake Tahoe...all built in the last 2 years.

macromicro said...

The problem with screeching about a housing bubble is...that...no such bubble is in evidence.

Bubbles are a function of price, not quantity. Prices have sagged in some areas, but that's after record gains.

A true bubble would have a price "pop" and prices would fall to pre-bubble levels. Nobody who I know is dumb enough, retarded enough, or uneducated enough to think that home prices are going to hit year 2000 levels.

Growing inventory? Yeah. More foreclosers? Check. Year 2000 prices? Never.

What I love about this site isn't the economics behind it, there is none. But it useful glimpse into the sociology of the losers, the people who are embittered to the point of irrationaltiy when they have seen life pass them buy.

You are True Believers in your bubble, as Al Gore is a True Believer in his melting ozone hole. It's a religion for you, something to salve your bitterness and feelings of worthlessness. This is group therapy, and some shrink should write a book on neurosis based on the posts here.

Martin said...
This comment has been removed by a blog administrator.
GreedKills said...

"Countrywide Financial (CFC)

Ups from 1 STAR (strong sell) to 2 STARS (sell)

See all is better, you HP's are just a bunch of Rush Limbaugh fanatics.

38.29 +0.71 (1.89%) Feb 28 11:52am ET

I just made .71 you losers."

.71?

I'm impressed...you own A share of stock.

Uncle Al said...

"What I love about this site isn't the economics behind it, there is none."

Keep musing over them dated charts and algorithms and maybe someday you'll get lucky and get a glimpse of the present but you will never ever ever be able to predict the future.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

any other blog anarachy sites that do not require sign ins?

Anonymous said...
This comment has been removed by a blog administrator.
yeah baby said...

Inflation can occur at the same time housing prices plummett. I don't think hyperinflation will occur unless the Fed lowers rates. In that case, housing prices are stable while the price of everything else increases. You see, there are millions of empty over-priced houses sitting out there. There is no cost to owning precious metals. There is no continual cost to owning stocks or funds - in fact you get dividends with some. To own extra houses, you have to pay taxes and upkeep for a place you are not using. You can rent it out for negative cashflow, if you want to deal with the hassles of being a landlord.

I had a college teacher - he bought a house at the highs back in the late 1980's. By the early 1990's housing prices had crashed. He bought a house in foreclosure for nearly 50% off in the same neighborhood then mailed in the keys on his old house. The bank took an $80K hit, which was huge in those days. I figure today, it would be a $250K hit for a similar house. This will knock the crap out of the subprime and alt-a markets.

Follow the bond market. You will see the credit crunch is coming hard. The Fed lowering the rates would be like pushing on the string. The mortgage market is already cracking down hard on subprimes. That money the Fed pushes out there will have nowhere to go. The stock market is shaky at best. If the money runs to commodities, inflation will take off. Maybe for once in the past 20 years, the free market will have a chance to do its magic.

Anonymous said...

But it useful glimpse into the sociology of the losers, the people who are embittered to the point of irrationaltiy when they have seen life pass them buy.

...oh the irony

Anonymous said...

anon 10:23,

Awesome!!

Anonymous said...
This comment has been removed by a blog administrator.
Shakster said...

Anonymous said...
Gold is at $666 right now!
------------------------------------Yesss! Evil Shackster
Cant wait for a 666% rise,MMMwwwaahahahahahahhaha.

FL_Bust said...

I just love all the "deniers" who have been coming on here lately ..

.. deny ... deny ... deny .. and then maybe the price of my home will go up again so I can refinance my ARM that I can barely afford ..

bozonian said...

Hey! Shhhhhhhh! Don't tell the stupid money about the bogus numbers. It's keeping them putting money in and letting me take it out.

Subprime: Your money checks in, but it doesn't check out.

Q: What the difference between the housing market and the Titanic?

A: The Titanic found a bottom.

Anonymous said...

HP'ers predicted the future. Housing prices will go down and they did and are and will be. You can find a few rich enclaves where they are propped up, but the middle class cannot afford to buy a home unless they use funny money exploding ARM loans. Most of these option ARM FB's will not be living in their newly "bought" home by 2009.

We predicted these subprime lenders would be crushed and they are. We predicted foreclosures would rise and they did.

Here's a few more predictions:
1. foreclosures will continue to rise
2. subprime lenders will continue to lose money
3. homebuilder profits will be lower in 2007 than they were in 2005-2006
4. subprime and liar's loans will be harder to come by
5. HP'ers will continue to laugh at the FB's and REIC

Anonymous said...

The bounce today was because there was little reason for the crash yesterday. There is still a lot of optimism in the market. Buyers looking for bargains knowing there was little chance of a drop.

I sold half my puts just in case but still anticipate a lot more downside from the lenders.

bozonian said...

Mutual funds and most investors can't short the market (either by law or just don't know how) so if the market doesn't continue to go up, a lot of Wall Street freak show barkers are going to be out of a job.

Oh, today Cramer finally said that sub prime was bad news.

I hope he learned a lesson from all this and stops being blind to certain aspects of the economy.

Anonymous said...

Hey macromicro! If there a way to do it, I'd make a bet against you that prices will indeed return to 2000 levels or below.

So far, everything I've predicted about the housing market is coming to fruition and I have bet that way on the stock market and made good money.

Anonymous said...

The NAR house numbers are bogus. You should never trust numbers coming from someone whose living depends on those numbers. I don't know what Wall Street is thinking trusting them.

That being said, I'm glad they're pumped up because they are allowing the housing crash to be even worse than imagined. The harder the fall, the worse the sentiment at the bottom and the lower the prices will fall.

God willing, I'll be able to buy Blowfly's McMansion for pennies on the dollar and evict him without pity.

Now back to the hotty waiting for me on my smelly, ratty couch that I found in a dumpster.

robert said...

Anonymous said...
Keith, Dunno your email-

Awhile back somebody posted on one of your threads the following.
It was a long list of quotes from heavyweights in Govt and Finance saying things were OK and that current conditions would only get better. These were all qoutes from the early years of the great depression and of course things subsequently got alot worse.

Could you tell me where that thread is? Anyone who has quotes like these, please post! It's enlightening to compare these old quotes to those coming from the liars (Lereah, Bernanke, etc) of today.


How about some headlines:

http://www.youdovoodoo.com/80sbubble.htm

Paris2LA said...

"What I love about this site isn't the economics behind it, there is none."

The bubble blog movement really began after a 2003 piece in the Economist pointed out the unsustainable ratios of price/rents for housing in the United States. Since then the ratios have become worse and in my area the ratio of house price to median income is about 10.5. Case and Schiller point out that this ratio typically goes from two to four in most of the country and four to seven or eight in California before reverting to the mean. The bizarre combination of excessively low interest rates and absence of lending standards put hundreds of thousands of people without much verifiable income into homes based on temporarily low payments that could be refinanced and kept low for another two years as long as housing appreciation continued. It has ceased and incomes have not risen substantially since 2000. These are basic economic arguments and we've all read them and most of us have studied them. In California, nobody capable of doing a cost benenfit analysis would buy a home now and the industry is focussed almost entirely on recent immigrants, people blinded by greed, and those who base major decisions only on emotion. Although there is a psychological component to macroeconomic trends, asset prices always revert to the trend and this is happening now in housing. This is econ 101.

MIbrahim said...

I agree with you on the 66% percent. I did some analysis and my analysis shows that the resale market in my area (DC Metro) fell approx. 33%. New homes should have fell more, since they lead the resale. Plus, other areas that are not supported by in flow of people and government spending on jobs, should see further and steeper decrease. That's why I think the 66% is a very reasonable guess.

Here

Anonymous said...

It's nice to see a picture of my work finally get on the web. Nothing like seeing great architecture on fire.

RayNLA said...

I'm starting to feel like NOAH!

Now tell me how can these numbers improve with the recent tightening of lending standards, and subpime banks scraping thier names of the doors? Now hardly anyone can BUY or RE-FI. Alas... the builders are still building like everyone works for Google.

Forget the RE-cession we are already there!!! (since 3rd Quarter 06)
I am starting to worry about an ensuing DE-pression by 2nd Quarter 2009. Right after the worst Christmas buying season since the last episode of the Ed Sulivan show.


I will always remember a particular night at Starbucks on Sunset in a heated debate with a good friend regarding the fall of new home sales this past November. Now we are talking a high double didget decreace and the use of the word plunge. The next adj. used in a sentence regarding housing will be CRASH.

Is it me or do you too think of WATER when you hear the word plunge? Maybe that's why many say this housing debacle will be a "soft landing".

I better finish my BOAT!

RayNLA

http://www.marketwatch.com/news/story/us-new-home-sales-fall-166/story.aspx?guid=%7B7A2A4137%2D1955%2D424E%2DACA2%2DD05A324BD8C9%7D&ref=patrick.net

Anonymous said...

"What I love about this site isn't the economics behind it, there is none."

If you want reliable economic data, go watch Kudlow and Cramer. And for fair and balanced news, watch Fox. And for having a good time, call 699-6969.

Anonymous said...

Heard on the Street --

A major newspaper in Ohio is going to run an article which estimates that 57% of all existing Ohio homeowners are at high risk of forclosure from 2007 - 2010.

The Ohio economy has been hurt by automotive job losses but 57% is too high... Has anyone here on this blog seen anything to support the above rumor?