Thursday, August 24, 2006

July New Home Sales

New Home Sales data was released by the Census Dept. this morning:

Sales of new one-family houses in July 2006 were at a seasonally adjusted annual rate of 1,072,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.3 percent (±11.5%)* below the revised June rate of 1,120,000 and is 21.6 percent (±10.1%) below the July 2005 estimate of 1,367,000.

The median sales price of new houses sold in July 2006 was $230,000; the average sales price was $293,500. The seasonally adjusted estimate of new houses for sale at the end of July was 568,000. This represents a supply of 6.5 months at the current sales rate.

From Bloomberg:

New Home Sales in U.S. Fell to a 1.072 Million Pace in July
New home sales in the U.S. fell last month to the second-slowest pace this year and inventories rose to a record, raising the risk for the economy that the housing market slowdown will become more pronounced.

Purchases of new homes, which account for about 15 percent of the market, dropped 4.3 percent to an annual pace of 1.072 million from 1.12 million in June, the Commerce Department said in Washington. Sales in the Midwest slumped to the lowest level in almost nine years. The median U.S. home price rose 0.3 percent from July 2005, the smallest year-over-year rise since a decline in December 2003.

The weakening housing market has left builders with record inventory and little choice but to reduce prices at a time when profits are declining. Some Federal Reserve policy makers have said a slump in housing is one of their biggest concerns. Refinancing, which provided homeowners with extra cash to spend, may dry up as home values decline.

From Marketwatch:
10:00 AM ET 8/24/06

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10:00 AM ET 8/24/06

Will be updated as new information becomes available.

Caveat Emptor!


Blogger grim said...

Some news from Florida, from the Herald Tribune:

Housing slump deepens in July

So much for a soft landing.

The median price of a single-family home sold in the Sarasota region in July dropped 11 percent from a year ago and the number of homes sold plummeted nearly 50 percent, according to numbers released Wednesday.

The report from the Florida Association of Realtors showed that the market was among the weakest in the state and that July was the worst month for Sarasota home sellers this year. The fall in the median price to $301,100 from $338,100 a year ago was the largest percentage drop of any Florida metropolitan area. The decline in the number of sales was the second-worst in the state. The median price is the point at which half the houses sold for more, half for less.

Meanwhile, single-family home prices in Charlotte County-North Port dropped 4 percent to a median sales price of $228,300, while sales activity was off by 37 percent from a year ago, its worst decline so far in 2006.

The statistics reflect a deepening of the sales slump that began last summer, following three years of zooming values and sales activity.

Last year 680 homes sold in July; this year only 349 did. The 49 percent decline in sales activity was Sarasota's worst monthly performance in 2006, in percentage terms.

The only area in state with a greater July-to-July decline than Sarasota was Naples, at 51 percent.

8/24/2006 08:51:00 AM  
Blogger grim said...

From Nevada, from the Record-Courier:

Average Douglas home price declines $130K

The seller's market in Douglas County is over.

The average price of a home in Douglas County dropped significantly in recent months, from a high of $675,000 during the last quarter of 2005 to $544,600 during the first quarter of 2006.

That's a drop of about $130,000, according to a quarterly report compiled by the Northern Nevada Regional Multiple Listing Service.

The organization provides information to real estate professionals in eight Northern Nevada counties and according to their figures, the number of homes on the market has risen from 584 to 719, while the number of homes sold has dropped, from 229 to 171 during the same period.

The amount of time homes are on the market in Douglas County also increased during that period, from 61 to 90 days.

Steve Bohler, a broker/owner with Piñon Pines Realty in Minden, said home selling prices in Douglas County are significantly lower than the asking prices, which indicates to him that they're overpriced.

8/24/2006 08:58:00 AM  
Blogger grim said...

New Home Sales in the Northeast region saw a year-over-year decline of 42.9%.

In July, the median new home price was $230,000. While higher than the median price of $229,200 set in July of last year, it is firmly below the 2005 yearly median of $240,900. Year over year average prices did see an increase from $297,000 in July of '05 to $293,500 this month. However, average prices this month are also below the 2005 whole year average of $297,000.

Caveat Emptor!

8/24/2006 09:14:00 AM  
Blogger chicagofinance said...

Late summer history lesson

quote from the American Revolution

"Give me YOY price reductions on real estate, or give me death."

8/24/2006 09:16:00 AM  
Anonymous Anonymous said...

News flash,

Williams Sonoma looking at price mark-downs. HMMNNNN!!!!!!!!

BC Bob

8/24/2006 09:41:00 AM  
Blogger grim said...


Here is a great piece for dissection..

The great turn-of-the-century housing boom


8/24/2006 09:48:00 AM  
Anonymous UnRealtor said...

Has MarketWatch become an "echo chamber" with all this grim news?

8/24/2006 10:01:00 AM  
Blogger Richie said...

Pull up news articles on the real estate bubble a year ago. They are hilarious. The industry insiders kept downplaying it.


8/24/2006 10:20:00 AM  
Blogger chicagofinance said...

for the people that can afford it, the movement on the Ten will start giving kindling to some bullish purchase behavior

3-Month 5.09
2-Year 4.87
10-Year 4.80

I'm getting 6.5% through my origination platform, and it's about to tick down to a lower level.

8/24/2006 10:26:00 AM  
Anonymous Anonymous said...

‘They’re Taking Lower Offers And ‘Are Happy About It’

The Boston Globe has this update from Massachusetts. “Home prices in Massachusetts fell 3.5 percent in July, the largest decline in 13 years, as the slowdown in the real estate market finally led sellers to cut their prices. That decline was the biggest since the state’s housing market was struggling in the wake of the banking woes of the early 1990s.”

“The number of condominium units sold in July tumbled by 21.4 percent, driving prices down 4.1 percent, the biggest decrease over the course of a year since December 1998.”

Wow it's getting ugly. And this is a big surprise to the industry pumpers.

8/24/2006 10:27:00 AM  
Blogger lindsey said...

That NE decline is nasty.

I know the south is where the growth is, and subsequently that is where the decline was smallest (12.4%), but I'm wondering how much of that is related to storm rebuilding in FLA and LA. I know the south would be doing better than the NE no matter what, and the Carolinas are a big player, but I would love to see sales for the hurricane states vs. non hurricane.

8/24/2006 10:28:00 AM  
Anonymous UnRealtor said...

The Boston Globe:

In Massachusetts, price declines add to the confusion among buyers afraid of overpaying, said Mark Gibbons, an agent in Stoughton. "There's concern they don't want to lose any equity if they want to sell a couple years down the road," he said.

Nancy Richards, an agent in Belmont, said sellers' attitudes have changed noticeably from last year, when they were "still clinging to hopes" of selling at record prices. This year, "they're taking offers that are lower and are happy about it."

But Newton agent Rona Fischman said many are "still in denial." The steep drop in July sales "tells me we're in the first year of the price declines," said Fischman. "Sellers who really have to sell are waking up and smelling the coffee. There's more coffee coming."

"More coffee coming" greedy grubbing sellers!

8/24/2006 10:32:00 AM  
Blogger patient homebuyer said...

how can this be possible?

i thought real estate only went up?

my realtor told me so

said there were not making any more land and i would be priced out forever.

it is not even labor day yet

too bad for the greedy types

well i guess il just go on my vacation (paid for in cash)

and keep on saving when i return

8/24/2006 10:35:00 AM  
Anonymous Anonymous said...

When will the public backlash start against the NAR and realtors?

8/24/2006 10:36:00 AM  
Anonymous Anonymous said...

But Newton agent Rona Fischman said many are "still in denial." The steep drop in July sales "tells me we're in the first year of the price declines," said Fischman. "Sellers who really have to sell are waking up and smelling the coffee. There's more coffee coming."

Hey Grubbers reread this again. some wise advice from a paid commissioned rep.

8/24/2006 10:41:00 AM  
Blogger thatbigwindow said...

I placed the offer of $39,000 below asking for a house that has been on the market over a year. The realtor said that the sellers were "insulted" so much by my low ball offer to them, that they will [punish me by] not presenting me with a counter offer

I politely told the realtor that I was quite comfortable with my offer, and if the sellers changed thier minds to give me a call.

8/24/2006 10:44:00 AM  
Anonymous Anonymous said...

The internet and 24 hours news show are getting the Bubble bursting news out more quickly to the public. The mood change is like night and day the last 60-90 days.
It's just like musical chairs.The music abruptly stopped and now those holding the bag are getting very desperate.
This is going to be fun to observe and learn more how people react after long-term periods of irrationality.

It is period like these where one can get a real education. So keep your eyes and ears wide open.



8/24/2006 10:52:00 AM  
Anonymous Anonymous said...

mmmm.. more coffee.....

8/24/2006 10:56:00 AM  
Anonymous Anonymous said...

If the house continues to sit, your 39k lowball offer will become much more attractive. Stubborness on the sellers' part will punish them.

I have been watching a home where the asking price has come down 80k (12%) in the last month. Your patience will be rewarded.


8/24/2006 10:58:00 AM  
Blogger Mr. Oliver said...

Welcome back, BOB!

8/24/2006 10:58:00 AM  
Anonymous Anonymous said...

Just remmeber this: If you have solid financials 20% real money to put down YOU OWN THIS MARKET. Don't let some snob seller tell you otherwise. Sellers can no longer demand anymore. The smart grubbers are waking uo to this concept and sentiment shift. Others feel they are entitled. Well they will be entitled to less equity in the future as prices continue downward.



8/24/2006 11:03:00 AM  
Anonymous UnRealtor said...

From CNN/Money:

More signs of a housing slump

Pace of new home sales falls more than forecast as inventory builds, prices decline.

August 24 2006: 11:06 AM EDT

NEW YORK ( -- More alarm bells for the stumbling housing market rang Thursday, as a government report on new home sales showed a bigger-than-expected drop in sales, along with a continued rise in unsold homes and a further weakening of prices in the closely watched sector.

New homes sold at an annual pace of 1.07 million in July, according to the Census Bureau report, down from the 1.12 million pace in June, which was also revised slightly lower than the original reading.

The pace of new home sales is now down 21.6 percent from year-earlier levels, with every region of the country showing double-digit percentage declines compared to July 2005.

8/24/2006 11:07:00 AM  
Anonymous Anonymous said...

8/24/2006 11:44:32 AM,

Insult them???? My ass!!!!!!!!

That realtor may have done you a huge favor. When the realtor calls back (I suspect they will), tell them that you now have a better feel for the market and you see the huge inventory sitting and getting biger. For what it is worth, I would tell them that, as a result of your due diligence you are now prepared to bid 20-30k less than your previous price. However, you may be comfortable where you are at now. Just a thought. Good Luck!!!!!!!

BC Bob

8/24/2006 11:09:00 AM  
Blogger chicagofinance said...

grim said...
Here is a great piece for dissection..
The great turn-of-the-century housing boom
8/24/2006 10:48:19 AM

Setting aside the main thrust of the paper and the resulting conclusions, I think they make a clear case that the run-up in prices of the last 5 years "ain't hap-nin again". According to their arguments, we have reached a new "equilibrium level" of ownership after absorbing various technological shocks [i.e. positive shocks]. They kind of choke on the pricing issue, and state weakly at the end that there is no bubble. eh?

Bottom line: prices have little stimulation to move further up.

8/24/2006 11:11:00 AM  
Anonymous Anonymous said...

Bagholders buying in 2004-2005 will probably take 12-15 years to break even.

8/24/2006 11:12:00 AM  
Blogger chicagofinance said...

"They kind of choke on the pricing issue, and state weakly at the end that there is no bubble. eh?"

Let me soften that comment in fairness to the authors. The data goes through 2003, so the last 36 months is left out.


8/24/2006 11:12:00 AM  
Anonymous Anonymous said...

AutoNation chief warns of recession
The Orange Country Register reports: AutoNation chief warns of recession
The chief executive of the nation's largest auto-dealing company said Tuesday the economy is "at a tipping point," threatened with recession as rising interest rates undermine consumer confidence.

"The question is how bad a recession," said Mike Jackson, CEO of AutoNation, which owns 338 auto franchises, including House of Imports in Buena Park, Power Toyota Cerritos, Lexus Cerritos and Power Toyota Irvine.

And the sellers are still denial.

WAKEUP GRUBBERS THE TRAIN IS LEAVING THE STATION. Good news for patient well financed buyers. They will be more accomodative in 6-12 months.

8/24/2006 11:21:00 AM  
Blogger grim said...

From Inman:

Prudential affiliate forms alliance with real estate auction company

Prudential Fox & Roach, Realtors, a large real estate firm serving the Greater Philadelphia market, today announced a strategic alliance with Sheldon Good & Co. Auctions Northeast LLC, one of the largest real estate auction companies in the nation.

"Real estate auctions, now a $51.2 billion industry in the U.S., allow sellers to increase properties' visibility to a national audience and to close sales quickly, often in 75 days or less, and without contingencies," said Ed Ritti, vice president of Prudential Fox & Roach, in a statement.

The company also announced, "As the real estate market softens, this alliance is particularly well timed." Auctions can assure a timeline for a sale when the market slows, and real estate agents can earn a commission for participating in an auction on behalf of their clients.


8/24/2006 11:25:00 AM  
Anonymous Anonymous said...

Homebuilders stocks... were now lowering their year guidance numbers to keep in-line with Analysts estimates.... to prevent massive stock sell-offs !!!

They do huge share buybacks also to mask LOW HOME SALES !!!!

Have fun folks !!!

8/24/2006 12:13:00 PM  
Anonymous Anonymous said...

"I placed the offer of $39,000 below asking for a house that has been on the market over a year. The realtor said that the sellers were "insulted" so much by my low ball offer to them, that they will [punish me by] not presenting me with a counter offer"

What is the MLS#, Please tell

8/24/2006 12:15:00 PM  
Anonymous UnRealtor said...

$39K "lowball" on this one?

MLS 2274151

8/24/2006 12:39:00 PM  
Anonymous Anonymous said...

The kind of houses on the market in North Jersey under $425,000 are all

1. neglected
2. outdated
3. over priced
4. always have something major wrong with them

I am afraid that it will take a very long time for sellers to come out of denial. Unfortunate

8/24/2006 01:11:00 PM  
Anonymous Paps said...

I feel bad for this guy....

Bought this house for 722K in Feb.

Tried to sell it himself for 760K

Now listed with a realtor for 669K with more than 50K loss

No takers for last few months. He already bought something in NYC and moved there. Now desperate to sell but no buyers...

8/24/2006 02:10:00 PM  
Anonymous Anonymous said...

"I feel bad for this guy.."


Bleed this F"er dry.

To many morons been living beyond their means for to long. Payback time.

8/24/2006 02:39:00 PM  
Anonymous UnRealtor said...

Who buys a $750K purchase on a whim, only to sell a few months later?

8/24/2006 03:04:00 PM  
Anonymous Anonymous said...

I know this isn't NJ, but found this in today's WSJ. You need a subscription to view. RK

Home Sour Home
Home Sour Home

1:43 p.m.: One puzzle about yesterday's existing-home-sales data from the National Association of Realtors is that, while the number of sales plummeted and inventories rose to a 13-year high, the median price nationally was up year-over-year.

Some skeptics have begun to wonder whether that reflects reality.

The NAR system has leeway for local brokers to enter price information about home sales into the database, according to analysts. Kynikos, Jim Chanos's short-selling hedge fund, has been watching the Florida market closely and noticed something odd about the Florida Association of Realtors press release, put out yesterday along with the national release.

Yesterday, the FAR said statewide realtor sales fell 33% in July to 14,451 from 21,691 a year earlier. But the median price went up 1%, the association said, to $250,800 from $248,200 in July 2005.

Mr. Chanos was suspicious and had his analyst pull the data from last year's press release. Sure enough, last year's chart for July 2005 has different numbers. Last year's chart says 21,669 homes were sold in July 2005, 22 fewer than the July 2005 number in this year's chart. More strikingly, the FAR said last year that the median price in July 2005 was $252,300, more than $4000 higher than the number in this year's chart.

Use the price figure the FAR used last year for July 2005 and compare it with the price figure for July 2006, and the median price drops year-over-year. Sure it's a modest 0.6% fall, but a drop is much different from a gain.

Perhaps those 22 fewer homes made the difference, but why were they excluded? There is no explanation in the release or the chart. It's important to note that economic data get revised all the time. Indeed, NAR has changed its numbers, as well. Last August, it said national sales clocked in at a 7.16 million-unit seasonally adjusted annual rate in July 2005. Today, the NAR said July 2005 sales rose at a 7.13 million-unit pace.

The FAR did not return calls for comment; if they do, we'll update this post.

8/24/2006 03:12:00 PM  

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