Pending Home Sales: December 2015

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for December showing that pending home sales increased only slightly with the seasonally adjusted national index rising 0.1% from November to stand 4.2% above the level seen in December 2014.

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Pending Home Sales: August 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for August showing that pending home sales declined with the seasonally adjusted national index falling 1.6% from July but increasing 5.8% above the level seen in August 2012.

Meanwhile, the NARs chief economist Lawrence Yun is suggests rising interest rates (as a  result of the Feds "tapering" debacle) worked to motivate spring buyers but now that the seasonal surge is over, lower home sales are expected:

"Sharply rising mortgage interest rates in the spring motivated buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month ... Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Existing Home Sales Report: September 2011

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for September showing a notable decline in sales with total home sales falling 3% since August but remaining 11.3% above the level seen in September 2010.

Single family home sales dropped a notable 3.6% from August but rose 12.2% above the level seen in September 2010 while the median selling price declined 3.9% below the level seen in September 2010.

Inventory of single family homes declined 3.2% from August dropping 11.2% below the level seen in September 2010 which, combined with the relatively slow pace of sales, resulted in an still elevated monthly supply of 8.22 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.

NAR Needs Congressional Investigation

The National Association of Realtors (NAR) has been one of the least scathed of the complicit actors coming out of the Great Housing Collapse.

The financial industry was decimated with millions losing their jobs and hundreds of firms and institutions going bust, the government sponsored enterprises went belly-up with equity investors taking a ferocious haircut, Angelo Mozilo, former CEO of Countrywide Financial, got a $67.5 million fine (small slap on the wrist for him and so far beat a criminal investigation) and even the once mighty Alan Greenspan was knocked down many pegs for his lack of leadership during the bubble years.

But what of the NAR?

They had their hands all over the housing game… in fact, in many ways they were the most responsible for whipping up the frenzy that drove housing parabolic during the bubble years.

From sponsoring the “flipping this and that house” shows on cable television, to consistently running newspaper, TV and radio ads designed to pump the financial benefits of home ownership, to lobbying for pro-housing and pro-homeownership initiatives through their Realtor political action committee (RPAC), to just plain old spin control of the important data points they release every month (existing home sales, pending home sales, etc.) the Realtors worked tirelessly to control as much of the housing PR as possible and their efforts were extremely effective.

But yet, what price have they paid for their notable contributions to the housing bubble and subsequent collapse that nearly brought down the entire global financial system?

Sure, tens of thousands of Realtors are out of work but frankly the agent population was way over the top during the peak years with most of the job losers having only been in the business for at most a few years prior to the collapse.

Shouldn’t the organization itself be held accountable in some way for its action during the housing mania?

Shouldn’t there be a congressional investigation into the matter?

If an investigation revealed the Realtor organization as firmly complicit in the buildup of the nation’s housing distortion, wouldn’t that work to rein-in this self interested and irresponsible private industry group?

Finally, the NAR controls some of the most important monthly housing data releases and with them the privilege of interpreting the housing trends for nation of media organizations that all but “cut and paste” the verbatim transcripts into their “articles”… shouldn’t the Census Bureau take over that important responsibility… they already release the new homes report, the housing starts and new residential construction report, the residential vacancies and homeownership report, retail sales, e-commerce sales, manufacturing and trade inventory and sales… why not the existing and pending home sales reports?

Too Proud to be a Realtor

For the last year or so the National Association of Realtors (NAR) has been a bit cagier about their blind devotion to home-ownership, the use of their primary political tool of increasing home ownership rates, and their soulless lack of respect for anything other than their own private industry interests but now, with the looming restructuring of the nation's housing finance scheme, they are back at it again.

Let us recount that it was this very organization that spent 2006 and 2007… the two peak years of the housing boom… urging millions of hapless Americans to embrace home-ownership by taking out full page ads in top tier national newspapers and radio and television commercials all pushing messages with themes like “Buy NOW” and “It’s a Great Time to Buy or to Sell”.

Further, recall that during the peak and on into the worst of the housing decline, the NARs own chief economist at the time David Lereah worked tirelessly to spin the conditions of the housing market into the best light continually insisting that the nation’s housing markets were NOT collapsing but simply taking a healthy tepid breather… only deflating slightly.

It’s important to also note that Lereah has since admitted that he was fudging the truth and that he did so because the NAR was his employer earning him a spot in Time magazines lineup of “25 People to Blame for the Financial Crisis”.

Now… why am I drudging all of this up you ask?

The NAR is at it again and this time they appear bent on preventing some of the most important changes to our housing finance system that have been proposed for generations.

The plight of Fannie and Freddie have apparently thrown the NAR into a panic… they are desperate to prevent the loss of sales that would ensue should the Obama administration truly guide our national housing finance scheme away from the failed government-sponsored approach that has been in place since the late 1930s.

The NAR immediately followed the administrations release of the Fannie Freddie proposal with a podcast whereby the current president Ron Phipps cleverly condemns the current Fannie Freddie scheme while simultaneously insinuating that without government sponsored entities there would be no 30-year fixed rate mortgage.

Further, Phipps ridiculously insinuates that holding a pro-housing position is tantamount to patriotism and that supporting the 30-year fixed rate mortgage is essentially a patriotic act.

Finally Phips reframes the NARs position on homeownership pitting the fate of our economy on housing and construction and outlining a plan for a three city bus tour that seeks to “celebrate” homeownership while convincing politicians of Americans devotion to and aspirations for owning a home.

This is precisely the type of nonsense the country needs to seriously distance itself from.

Along with the finance industry, the government sponsored entities (Fannie, Freddie, FHA, etc.), housing speculators and hapless buyers, the NAR was a main agent of destruction that first fueled the housing bubble and then made matters infinitely worse as the collapse ensued by ensnaring millions more into the scheme merely to protect their own private interests.

Now as we move meaningfully closer to a major restructuring the nation’s housing finance scheme, the importance of which cannot be overstated, the NAR shows itself again to be firmly aligned against the best interests of the country.

Pending Home Sales: September 2009

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for September showing a whopping 21.2% year-over-year increase in pending home sales nationally coming largely as a result of the governments historic housing tax gimmick.

Meanwhile, the NARs chief economist Lawrence Yun reports that there has been a “rush” of first-time “buyers” racing for a chance to jump at the governments housing tax carrot… the result… wealth stabilization for middle class families?

“What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month, … Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

The following chart shows the national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Look at the seasonally adjusted pending home sales results:

• Nationally the index increased 21.2% as compared to September 2008.
• The Northeast region increased 16.9% as compared to September 2008.
• The Midwest region increased 17.8% as compared to September 2008.
• The South region increased 22.8% as compared to September 2008.
• The West region increased 23.7% as compared to September 2008.

NARcasting The Future: April 2009

This week, the National Association of Realtors (NAR) provided their latest estimate of annual existing home sales for 2009 revising their 2009 total year sales forecast to 4.964 million units.

As usual the Realtors are continuing their spin but nowadays you can never truly know where their chief economist is in the grief-cycle.

One day he’s all "Nationally, home sales are stable now but are expected to increase in coming quarters."

The next he’s “The key to housing stabilization is whether or not there are sufficient buyers of foreclosed homes.”

I think he’s somewhere between “denial” and “bargaining” but that’s just my opinion…

In an effort to put their absurd bias into perspective I compiled all their existing home sales forecasts for 2007, 2008 and now 2009 into a chart along with a list of prominent quotes supplied with each forecast.

12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

1/10/2007 Prediction: 6.42 million units.
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 Prediction: 6.44 million units.
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units.
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units.
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007 Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units.
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units.
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units.
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units.
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

9/11/2007 Prediction: 5.92 million units.
Yun “Patient buyers in most areas who do their homework will recognize that housing remains a good long-term investment.”

10/10/2007 Prediction: 5.78 million units.
Yun "The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

11/13/2007 Prediction: 5.5 million units.
Yun "In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment… 2007 will be the fifth best year for housing on record"

12/10/2007 Prediction: 5.67 million units in 2007, 5.7 million units in 2008.
Yun "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007."

ACTUAL: 5.652 million existing units sold in 2007

01/08/2008 Prediction: 5.66 million units in 2007, 5.7 million units in 2008.
Yun "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

02/07/2008 Prediction: 5.38 million units full year.
Yun "Where builders have cut construction sharply, and in most areas with improving affordability conditions, we’ll generally see moderately higher home prices."

03/06/2008 Prediction: 5.38 million units full year.
Yun "Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace"

04/08/2008 Prediction: 5.39 million units full year.
Yun "Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year"

05/08/2008 Prediction: 5.39 million units full year.
Yun "Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied"

06/09/2008 Prediction 5.4 million units full year.
Yun "We’re seeing healthy price gains in moderately priced areas like Erie, Pa., and Corpus Christi, Texas, and double-digit gains in others"

07/08/2008 Prediction 5.31 million units full year.
Yun "Interestingly, there have been reports of multiple bidding after the large price cuts, so it is possible that most of the price declines have already occurred in those markets."

08/08/2008 Prediction 5.51 million units full year.
Gaylord "buyers [will] get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future,"

09/09/2008 Prediction 5.01 million units full year.
Yun "Nationally, home sales are stable now but are expected to increase in coming quarters."

10/08/2008 Prediction 5.04 million units full year.
Yun "What we’re seeing is the momentum of people taking advantage of low home prices…"

11/07/2008 Prediction 5.02 million units full year.
Yun "…we’re still in a broad period of stabilization"

12/09/2008 Prediction 4.96 million units full year.
Yun "Given the critical role of housing in an economic recovery, we’re confident sufficient (government) stimulus will be offered to bring more buyers to the market,"

ACTUAL: 4.912 million existing units sold in 2008

1/06/2009 Prediction 4.90 million units in 2008, 5.224 million units 2009.
Yun "With a proper real-estate focused (government) stimulus measure, home sales could rise more than expected, by more than 10 percent..."

2/02/2009 Prediction 4.912 million units in 2008, 5.116 million units 2009.
Yun "Forecasting is a hazardous sport at times. With so many pieces of the puzzle now moving in opposite directions, the crystal ball reading has become even cloudier."

3/02/2009 Prediction 4.927 million units.
Yun "One thing is for sure. The economy will not be able to recover in a sustainable way without home price stabilization."

4/06/2009 Prediction 4.964 million units.
Yun "The key to housing stabilization is whether or not there are sufficient buyers of foreclosed homes."

Banned (and Angry) No More!

I just wanted to update readers as to the status of my formally (or mistakenly) banned ZipRealty account.

I want to thank ZipRealty not only for reinstating the account but also for their gracious response and quick turnaround on the issue.

Also, I’d like to note that as a longtime ZipRealty user I would highly recommend their service as its one of the only (if not the only) real estate listing site that allows users to see all property details like address, all price reductions and days on the market (provided the house wasn’t pulled and re-listed) and short sale status etc.

It’s certainly my favorite listing site for stalking homes and getting a feel of seller desperation in this epic down market!

NARcasting The Future: March 2009

This week, the National Association of Realtors (NAR) provided their latest estimate of annual existing home sales for 2009 again revising down their 2009 total year sales forecast to 4.927 million units.

As usual, the latest forecast comes with another dose of truly ridiculous spin.

In an effort to put their absurd bias into perspective I compiled all their existing home sales forecasts for 2007, 2008 and now 2009 into a chart along with a list of prominent quotes supplied with each forecast.

12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

1/10/2007 Prediction: 6.42 million units.
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 Prediction: 6.44 million units.
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units.
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units.
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007 Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units.
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units.
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units.
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units.
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

9/11/2007 Prediction: 5.92 million units.
Yun “Patient buyers in most areas who do their homework will recognize that housing remains a good long-term investment.”

10/10/2007 Prediction: 5.78 million units.
Yun "The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

11/13/2007 Prediction: 5.5 million units.
Yun "In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment… 2007 will be the fifth best year for housing on record"

12/10/2007 Prediction: 5.67 million units in 2007, 5.7 million units in 2008.
Yun "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007."

ACTUAL: 5.652 million existing units sold in 2007

01/08/2008 Prediction: 5.66 million units in 2007, 5.7 million units in 2008.
Yun "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

02/07/2008 Prediction: 5.38 million units full year.
Yun "Where builders have cut construction sharply, and in most areas with improving affordability conditions, we’ll generally see moderately higher home prices."

03/06/2008 Prediction: 5.38 million units full year.
Yun "Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace"

04/08/2008 Prediction: 5.39 million units full year.
Yun "Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year"

05/08/2008 Prediction: 5.39 million units full year.
Yun "Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied"

06/09/2008 Prediction 5.4 million units full year.
Yun "We’re seeing healthy price gains in moderately priced areas like Erie, Pa., and Corpus Christi, Texas, and double-digit gains in others"

07/08/2008 Prediction 5.31 million units full year.
Yun "Interestingly, there have been reports of multiple bidding after the large price cuts, so it is possible that most of the price declines have already occurred in those markets."

08/08/2008 Prediction 5.51 million units full year.
Gaylord "buyers [will] get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future,"

09/09/2008 Prediction 5.01 million units full year.
Yun "Nationally, home sales are stable now but are expected to increase in coming quarters."

10/08/2008 Prediction 5.04 million units full year.
Yun "What we’re seeing is the momentum of people taking advantage of low home prices…"

11/07/2008 Prediction 5.02 million units full year.
Yun "…we’re still in a broad period of stabilization"

12/09/2008 Prediction 4.96 million units full year.
Yun "Given the critical role of housing in an economic recovery, we’re confident sufficient (government) stimulus will be offered to bring more buyers to the market,"

ACTUAL: 4.912 million existing units sold in 2008

1/06/2009 Prediction 4.90 million units in 2008, 5.224 million units 2009.
Yun "With a proper real-estate focused (government) stimulus measure, home sales could rise more than expected, by more than 10 percent..."

2/02/2009 Prediction 4.912 million units in 2008, 5.116 million units 2009.
Yun "Forecasting is a hazardous sport at times. With so many pieces of the puzzle now moving in opposite directions, the crystal ball reading has become even cloudier."

3/02/2009 Prediction 4.927 million units.
Yun "One thing is for sure. The economy will not be able to recover in a sustainable way without home price stabilization."

Pending Home Sales: January 2008

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for January showing a 6.4% year-over-year decline in pending home sales nationally despite a 13.5% increase in pending sales seen in the heavily foreclosure laden markets of the west region.

Meanwhile, the NARs chief economist Lawrence Yun continues to spin his tales of improved housing affordability while embracing government funded handouts for his industry.

“Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales, … We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit.”

The following chart shows the national pending homes sales index since 2005 compared monthly. Notice that each year, the months value is decreasing fairly consistently (click for larger version).

The following chart shows the national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Look at January’s seasonally adjusted pending home sales results and draw your own conclusion:

• Nationally the index declined 6.4% as compared to January 2008.
• The Northeast region declined 19.7% as compared to January 2008.
• The Midwest region declined 13.8% as compared to January 2008.
• The South region increased 9.1% as compared to January 2008.
• The West region increased 13.5% as compared to January 2008.

The Almost Daily 2¢ - Hello Reality

Regular readers of this blog know that I have had an unquestionably bearish outlook for the U.S. economy for some time now.

To me, the housing-credit bubble represented the ultimate market, government and social distortion as participants large and small, public and private, households and institutions all plunged into a delusional and self-reinforcing melee of easy money, easy profits, easy living and luxury all resulting in a level of conceit and individual, corporate and government fraud and corruption that has likely never before been seen.

Even during the lengthy unwind with its obvious course and impending nature there were charlatans desperately clinging to the era of excess while aggressively attempting to bamboozle the party back into action.

Now we all know the truth…

No… this wasn’t the “Best Time to Buy a Home”

No… this isn’t the “Goldilocks Economy”

No… We are not experiencing a “Soft Landing”

No… Most of the correction is not “Behind Us”

And emphatically YES we are in “Recession”

Recession is simply an obvious, logical and inevitable outcome of the reversal of an era where so many mistakes were made on so many levels by so many participants.

The current list of economic woes is significant… We are likely on the precipice of a significant and prolonged bout of unemployment, home values still have a long way to go simply to match incomes, prime and near-prime homeowners have only now just begun to relent into foreclosure, consumption continues to decline, production is in full decline, consumer, CEO and investor sentiment remains at historic lows, on and on…

With the aggressive sell-off on Wall Street perhaps now we can all agree that our economy is in tough shape and that we will all likely be struggling with this crisis for some time.

Question of The Day - Nationalize NAR?

Given the government’s willingness to bailout and nationalize failed Wall Street firms all, in a sense, in an effort to protect the wider economy from the after effects of largely unregulated and unfettered greed, shouldn’t they now direct their attentions to the National Association of Realtors (NAR)?

NAR played a primary role in pumping the housing ponzi-scheme and even today continues to promote self-interested spin and false information… isn’t it time that the whole real estate broker industry and process simply be nationalized?

Collapsedachusetts Existing Home Sales (Preview): January 2008

Sources inside the Massachusetts Association of Realtors (MAR) report that tomorrows monthly existing home sales results will show that January single family home sales crashed 27.7% on a year-over-year basis while condo sales collapsed 33.7% over the same period.

Further, the single family median selling price declined 5.6% on a year-over-year basis to $321,000 while condo median prices increased 3.5% to $277,500.

It’s also important to note that January’s single family home sales count was the lowest January result on record since 1992 and at 1984 units sold was 37.9% below the record peak set in January 1999 and 33.1% below the more recent peak of January 2005.

The following charts (click for larger) show the decline in single family home sales since 2005.

Notice that January 2008 is registering a home sales count well below even the 2007 level as well as indicating that the February’s results will be well below 2000 units, a significant decline.


After two years of declining home sales, weakening home prices and now looming recession it appears that Massachusetts may have just entered the price “free-fall” phase of the housing decline where home prices continuously drop even through the spring months which are typically strong in the region.

Stay tuned as tomorrow the S&P/Case-Shiller home price index results will be available for Boston likely showing the most significant decline in the last 12 months.

Constructing Capitulation: July 2007

Looking back at July’s results (released throughout August) it’s obvious that the nation’s housing markets are continuing to show significant weakness, even during what, for most measures, is generally the seasonal peak in activity for the year.

Slowing demand and the now undeniable mortgage-credit-financial crisis are continuing to weigh heavily on housing, setting up for what seems fairly certain to be a new leg down and ultimately a severe housing recession.

The preliminary GDP report for Q2 2007 continued to show a significant drag coming from the decline in residential fixed investment as well as significant revisions to past GDP results better demonstrating the pronounced effects this drag has had for the last four quarters.

The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).

The housing weakness also continues to clearly show up in retail sales as consumer’s pullback on spending for some of the most discretionary of goods.


The National Association of Realtors (NAR) released their sixth consecutive downward revision to their annual home sales forecast for 2007 putting the current outlook far below the “rose colored” initial predictions from the start of the year.

NAR Chief Economist Lawrence Yun now suggests that the demand is still out there but it’s just being “delayed”.

Homebuilder confidence continues to decline to near multi-decade lows with respondents indicating that estimates of “present” and “future” conditions as well as buyer traffic continues to slump.

The Census Department’s New Residential Construction Report which continues to indicate horrendous weakness in the nation’s housing markets and for residential construction showing substantial declines on a year-over-year basis to single family permits both nationally and across every region.

The Census Department’s New Residential Home Sales Report that, despite all the traditional media’s “unexpected increase” coverage, continues to show weakness as well as significant downward revisions to April and May’s results.

As with prior months, on a year-over-year basis sales are still declining significantly at 10.2% below the sales activity seen in July 2006.

NAR’s Existing Home Sales Report showing additional confirmation that the nation’s housing markets are continuing to experience weakness with EVERY regions showing considerable declines to sales, across every product (single family, condos), as well as continued increases to inventory and monthly supply.

The June 2007 results of the S&P/Case-Shiller Indices are continued to show weakness for the nation’s housing markets with 15 of the 20 metro areas tracked reporting significant declines.

Topping the list of decliners on a year-over-year basis was Detroit at -11.01%, Tampa at -7.70%, San Diego at -7.30%, Washington DC at -6.96%, Phoenix at -6.55, Las Vegas at -5.09%, and Miami at -4.79%.

Furthermore, comparing the last major downturn in the late 80s and early 90s to the current data may indicate that the current housing downturn is in its infancy with year-over-year declines only just having materialized in the last eleven months.

The Census Department’s Construction Spending report for June again demonstrated the significant extent to which private residential construction spending is contracting.

With the weakening trend continuing, total residential construction spending fell -16.11% as compared to July 2006 while private single family construction spending declined by a grotesque -25.32%%.

Key Report Details:

• The seasonally adjusted annul rate of private residential construction spending has now dropped 23.27% from the peak set back in February 2006.
• Overall private residential construction spending dropped -16.11% as compared to July 2006.
• Single Family residential construction spending dropped 25.32% as compared to July 2006.

The following charts show changes to construction spending (click for larger version):

A Closer Look at New Home Sales: July 2008

As I had noted before, in 2004 new home sales exhibited an interesting phenomena whereby the distribution of home sales, grouped by several price ranges, effectively flipped from what one might conclude to be logical and from the historical norm.

Prior to 2004, in general, the least expensive new homes sold the most numbers of units while the most expensive new homes sold the least numbers of units.

Not a very surprising result as one might easily conclude that the majority of new home buyers cannot, in general, afford the most expensive homes.

After 2004 though, the scenario exactly flipped in that the most expensive new homes easily outsold the least expensive homes.

Now, this could either be explained by the inflating of home prices during the boom, easy availability of bloated loans, home buying patterns, or a little bit of all of these events but no matter what the cause, it appears that the scenario is now in the process of flipping yet again.

Since the peak in 2005 new home sales have been falling among all price ranges but more recently there have been relative strength in the sales of lower priced home and a marked weakness in sales of the highest priced homes.

The interesting point here is that the “flip” that occurred in 2004 was likely an anomaly made possible by the boom which is likely to completely reverse in the coming years as the environment for home building settles back to a more historically normal scenario.

This “re-flipping” of new home sales may serve as a good indicator of the unwinding of the boom.

The first chart shows new home sales for the highest priced new homes, i.e. homes priced above $300,000 (click for larger version). Notice that since 2005 sales have been declining sharply.

The following chart shows both a "smoothed" and raw unadjusted number of new homes sold for four different price ranges (click for larger). Notice that the price ranges appear to be converging and likely flipping back to a more historical normal pattern.


Another way to visualize this issue is to view each price ranges “market share” of all new homes sold (click for larger version). Notice that back in 1999, over 40% of new homes were priced under $200,000 whereas now, new home sales for homes in this price range total less than 20%.

S&P/Case-Shiller: June 2007

The most recent release of the S&P/Case-Shiller home price indices for June continued to show weakness for the nation’s housing markets with 15 of the 20 metro areas tracked reporting significant declines.

Topping the list of decliners on a year-over-year basis was Detroit at -11.01%, Tampa at -7.70%, San Diego at -7.30%, Washington DC at -6.96%, Phoenix at -6.55, Las Vegas at -5.09%, and Miami at -4.79%.

Additionally, both of the broad composite indices showed accelerating declines slumping -4.07% for the 10 city national index and -3.49% for the 20 city national index continuing the first negative slump in annualized appreciation seen since the early 90’s housing bust.

To better visualize the results use the PaperEconomy S&P/Case-Shiller/Futures Charting Tool and be sure to read the Tutorial in order to best understand how best to utilize the tool.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).

What’s most interesting about this particular comparison is that it highlights how young the current housing decline is, having only posted four consecutive year-over-year (YOY) monthly declines to home prices.

Looking at the actual index values normalized and compared from the respective peaks, you can see that we are only ten months into a decline that, last cycle, lasted for roughly fifty four months during the last cycle (click the following chart for larger version).

The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.

As you can see the last downturn lasted 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.

Notice that peak declines have been FAR more significant to date and, keeping in mind that our current run-up was many times more magnificent than the 80s-90s run-up, it is not inconceivable that current decline will run deeper and last longer.

Existing Home Sales Report: July 2007

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for July showing that the fall-off in demand for residential real estate is continuing and occurring uniformly across the nation’s housing markets.

Senior Economist Lawrence Yun is now suggesting that the weakness, if it were not for the mortgage-credit meltdown, home sales would “probably” be rising.

“Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months, … Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.”

Additionally, NAR President Pat Vredevoogd Combs continues to attempt to persuade potential buyers to ignore the obvious dramatic housing correction.

“For buyers able to qualify for conventional financing, there are ample opportunities in the current market, … Availability and pricing of conventional loans are reasonable, and FHA-insured mortgage applications have been rising as low- and moderate-income buyers seek alternatives to subprime loans. If buyers are in it for the long haul, now can be a good time to get into your home.”

Looking at July’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with EVERY region showing considerable declines to sales of BOTH single family and condos as well as significant increases to inventory and monthly supply.

Keep in mind that we are now seeing existing home sales declines on the back of last years fairly dramatic declines further indicating that the housing markets are not bottoming as many had been suggested last fall.

Below is a chart consolidating all the year-over-year changes reported by NAR in their July 2007 report.

Particularly notable are the following:

• Sales are down significantly in EVERY region and for BOTH single family and condo.
• ALL Inventory and Months Supply show significant increases on a year-over-year basis.

NARcasting The Future: August 2007

Last week, the National Association of Realtors (NAR) released yet another downward revision to their outlook for existing home sales for 2007 along with another dose of truly ridiculous spin.

In an effort to put their absurd bias into perspective I compiled all their forecasts for 2007 home sales into a chart along with a list of prominent quotes supplied with each forecast.


12/11/2006 - Prediction: 6.40 million units
Lereah "Most of the correction in home prices is behind us."

1/10/2007 - Prediction: 6.42 million units
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 - Prediction: 6.44 million units
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007
Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

On Vacation!

I’ll be away on vacation for the next week so I thought I would take this opportunity to recommend a few of the excellent blogs on the blogroll that you can read in order to stay completely current on the housing decline.

Don’t forget, while I’m away the Inventory Tracking Tool, S&P/Case-Shiller/Futures Tool, OFHEO HPI Tool, and Bubble Times are always running and up to date so check them daily.

Also, although BNN - The Bubble News Network will have no new videos added until I return, there is now OVER 300 bubbly clips posted up there... So Watch Away!

For up-to-date blogging on housing and lending, as well as interesting analysis and charts of the Countrywide Financial REO inventory check out the Countrywide Foreclosures Blog.

For an exceedingly interesting perspective on the US economy including complete coverage of the housing fiasco read Immobilienblasen.

For BNN-style video-blogging there is both the Real Estate Video Blog and the New York City Housing Blog with daily video posts of all things bubbly.

For S&P/Case-Shiller and OFHEO charts as well as a host of other really impressive charts check out Housing Bubble Bust.

For Bubble Times-esc and Digg-styled Housing Bubble news you can turn to Housing Bubble News Central and Speculative Bubble.

For the best in regional coverage of the housing and mortgage meltdown read any of the blogs in the US Regional Section of my blogroll particularly:

• Boston Bubble
• Sacramento Landing
• The Marin Real Estate Blog
• The New Jersey Real Estate Report
• The Second City Bubble blog
• The Chicago Bubble Blog

Happy bubble reading and be sure to check back to PaperMoney as I’ll be sure to be blogging away as soon as I return.

S&P/Case-Shiller: May 2007

Yesterday’s release of the S&P/Case-Shiller home price indices for May continued to show weakness for the nation’s housing markets with 15 of the 20 metro areas tracked reporting significant declines.

Topping the list of decliners on a year-over-year basis was Detroit at -11.06%, San Diego at -6.96%, Tampa at -6.67, Washington DC at -6.34%, Phoenix at -5.55, Boston at -4.29% and Las Vegas at -4.10%.

Additionally, both of the broad composite indices showed accelerating declines slumping -3.38% for the 10 city national index and -2.83% for the 20 city national index continuing the first negative slump in annualized appreciation seen since the early 90’s housing bust.

To better visualize the results use the PaperMoney S&P/Case-Shiller/Futures Charting Tool and be sure to read the Tutorial in order to best understand how best to utilize the tool.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).

What’s most interesting about this particular comparison is that it highlights how young the current housing decline is, having only posted five consecutive year-over-year (YOY) monthly declines to home prices.

Looking at the actual index values normalized and compared from the respective peaks, you can see that we are only twelve months into a decline that, last cycle, lasted for roughly fifty four months during the last cycle (click the following chart for larger version).

The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.

As you can see the last downturn lasted 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.

Notice that peak declines have been FAR more significant to date and, keeping in mind that our current run-up was many times more magnificent than the 80s-90s run-up, it is not inconceivable that current decline will run deeper and last longer.