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Existing Home Sales Report: June 2007

Rabu, 25 Juli 2007

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

Senior Economist Lawrence Yun is now suggesting that the weakness is mostly as a result of the increasing interest rates, tightening lending standards and home buyers getting mixed signals about the state of the market.

“Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate, … Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path. Although general buying conditions remain favorable for long-term home buyers, it appears some buyers are looking for more signs of stability before they have enough confidence to make an offer.”

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

“Consumers should avoid making decisions based on what they hear about the national market because all real estate is local, … There are pockets around the country where home sales are quite strong, so you really need to consult with a knowledgeable real estate professional about local market conditions – experience is one way Realtors® add value to the real estate transaction, and a reputable agent is your best resource to navigate the current market, whether it’s moving up or down,”

Looking at June’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with EVERY regions showing considerable declines to sales as well as continued increases to inventory and monthly supply.

It’s important to note that June is traditionally the best month for sales so although we are seeing significant weakness to sales as compared to last year’s results, the greater number of sales in this peak months results are likely disproportionately impacting both inventory and “months of supply”, making them appear to be decelerating.

Sales are essentially all down here from now for the remainder of 2007 and both inventory and “months of supply” should resume the bloating with every remaining month.

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 June 2007 report.

Particularly notable are the following:

  • ALL sales are down with the worst coming from the West where sales were down in the high double digits for all product types.
  • ALL Inventory and Months Supply show significant increases on a year-over-year basis.

Pending Home Sales: April 2007

Jumat, 01 Juni 2007

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for April 2007 showing a continuation of the historic decline to residential housing on a month-to-month and year-over-year basis, both nationally and in every region.

Additionally, the Northeast, Midwest and West regions have fallen back below 100 indicating that April’s home sales activity was BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.

Proving that not every shill economist can bluff economics data with the deftness of the “late great” David Lereah, the new “fill-in” NAR Senior Economist Lawrence Yun blatantly presents false outlook.

“It looks like we may be leaving a period of market disruptions, and for the past two months the pending home sales index has been similar in year-ago comparisons, which means home sales might ease but should be fairly stable in the months ahead,”

Similar to year ago comparisons!!?

I suppose, if you call 10% year-over-year decline for each of the last two months similar.

Yun then goes on to suggest that the subprime meltdown is over and the “disruption” has played itself out.

“In April, existing-home sales declined in part because some subprime lenders went out of business and disrupted the market, but the impact appears to be diminishing and mortgage applications have risen in the last month,”

Keep in mind the current pending sales decline comes ON TOP of last years historic fall-off so the continued weakness is a sure sign that the decline is not ephemeral.

Look at the April pending home sales results and draw your own conclusion:

  • Nationally the index was down 10.2% as compared to April 2006.
  • The Northeast region was down 15.4% as compared to April 2006.
  • The West region was down 11.7% as compared to April 2006.
  • The Midwest region was down 4.4% as compared to April 2006.
  • The South region was down 10.4% as compared to April 2006.
So it appears that, year-over-year, contract activity is still dropping rather sharply with ALL regions continuing to show significant declines.

Existing Home Sales Report: April 2007

Jumat, 25 Mei 2007

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for March showing continued and uniform weakness of the nations housing markets.

Without missing a beat, the new “fill-in” Senior Economist Lawrence Yun continues to suggest that the weakness is indicating stabilization.

“We’ve been anticipating slower home sales because many subprime loan products are no longer available … In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and the lending community. Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward.”

Additionally, NAR President Pat Vredevoogd Combs continues to attempt to scare buyers into action with the threat of increased interest rates.

“Long-term financing remains favorable, but interest rates are rising … Although some buyers have a wait-and-see attitude regarding home prices, they should consider that rising interest rates later this year could offset a lower sales price when you get down to the monthly payments.”

Looking at March’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with virtually all regions showing considerable declines to median price and sales as well as significant increases to inventory and monthly supply.

Sales are, in fact, down in EVERY region with the majority of declines in the double digits.

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 suggested last fall.

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

Particularly notable are the following:

  • Majority of median prices are down.
  • ALL sales are down.
  • ALL Inventory and Months Supply show HIGH double digit increases on a year-over-year basis.

Boo Hoo?

Selasa, 15 Mei 2007

Oh.. Boo Hoo.. That mean Lesley Stahl hurt the wittle twade organization’s wittle feewings…

Or so went the National Association of Realtors (NAR) sad, feeble smokescreen of a response to last Sunday’s 60 Minutes segment.

Well before you get all teary, let me remind you that the National Association of Realtors is not only Americas largest trade organization but also the most wealthy and influential Political Action Committee (PAC).

As such, they are routinely called to Capitol Hill to provide “important” testimony as well as certainly calling upon on our representatives (at least the ones they supported with campaign donations) to apply the best influence that money can buy.

Stated plainly, the NAR is far more powerful than any individual American using their campaign contributions and ongoing lobbying to virtually ensure that their interests are represented well in excess of the average consumers.

What happens if there is conflict between what would be in the best interest of the American consumer and what would be in the best interest of the NAR?

Ill let you decide.

The 60 Minutes segment merely stated the obvious, questioning the sense of the traditional 6% broker commission as well as pointing out that in the age of the Internet, the traditional real estate broker services are going the way of the buggy whip.

There were no new revelations in the segment as these are the very same issues many average consumers have asked themselves in recent years after seeing the obvious disconnect between the standard 6% commission Realtors have established and the actual work performed.

Yes, it’s true that, as NAR states, commissions are always negotiable and in fact average more like 5.1% nationally but one should use caution before jumping to the conclusion that Realtor commissions represent a free and efficient market.

The reality is that NAR has worked to prevent competition from limited service brokers who would otherwise charge minimal flat fees or commissions at or below 4% in exchange for services that generally assist sellers in listing their home with the MLS as well as providing a range of other Internet based marketing efforts.

Keep in mind that this attempt to stifle competition is really an attempt to prevent technology from doing what it does best, that is, bringing new and innovative services to the market that dramatically increase the efficiency of existing processes.

As we know very well, this efficiency is often translated to savings in the cost involved of a particular process which can be passed on to the consumer through free and unfettered competition.

Therein lies the real issue for the NAR.

The Mother of all “disruptive” technologies, namely the Internet, is bearing down on the NAR and instead of embracing the change and innovating, they are fighting it tooth and nail in an effort to maintain the status of the traditional full service broker model.

This is certainly NOT in the best interest of the consumer but is this really in the best interest of the association members?

You brokers out there ought to ask yourselves what services you have found to be most impressive recently.

The schlocky listing sites hosted by many full service agencies or the innovative services such as Zillow.com, ZipRealty.com, and Redfin.com.

Remember, it’s your future that is in flux here.

You can either choose to join the trend that will inevitably yield a host of new services and models for transacting the business of real estate, or fight it and likely be left behind in an ever dwindling cohort of “old timers” attempting to provide defunct services.

The complete 60 Minutes segment as well as Lesley Stahl’s post-segment Q&A can be viewed now on BNN!

Pending Home Sales: March 2007

Selasa, 01 Mei 2007


Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March 2007 showing spectacular weakness on a month-to-month and year-over-year basis, both nationally and in every region.

Additionally, the both the Northeast and Midwest regions have fallen back below 100 indicating that March’s home sales activity was BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.

Like my sever, the nations housing markets continue to crash and burn and now with the completion of the March results we can see unequivocally that the recent weakness, although clearly influenced by weather patterns, is fundamental and systemic.

According to David Lereah, the soon to be Ex-Chief Economist of NAR (hat-tip BubbleMeter - David Lereah Watch), the “el-nino” effect/ruse is now a thing of the past leaving the subprime slime as the main culprit in the slowing sales.

“Although the weather improved in March, we’re starting to see the effects of a decline in subprime lending and tighter lending standards… Home sales will be relatively sluggish in the second quarter, but a modest uptrend should resume during the second half of this year.”

Keep in mind the current pending sales decline comes on top of last years historic fall-off so the continued weakness is a sure sign that the decline is not ephemeral.

Look at the March pending home sales results and draw your own conclusion:

  • Nationally the index was down 10.5% as compared to March 2006.
  • The Northeast region was down 14.0% as compared to March 2006.
  • The West region was down 8.6% as compared to March 2006.
  • The Midwest region was down 9.5% as compared to March 2006.
  • The South region was down 10.6% as compared to March 2006.
So it appears that, year-over-year, contract activity is still dropping rather sharply with ALL regions continuing to show significant declines.


Crash and Burn!

Senin, 30 April 2007


Oh for Kripes sake!

My server has bit the dust!

No BNN… No Bubble Times… No S&P/Case-Shiller/Futures Charting Tool… No Inventory Tracking Tool… Not even a stinking OFHEO Chart… Nothin’…

But, not to worry.

I’m working diligently to get all the issues resolved and should have the system restored in a couple of days.

For now though, let me spotlight some of my favorite blogs that offer similar services to the ones now absent from my blog.

First, 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.

Of course, Ill still be blogging throughout these trying times and Ill certainly be sure to yell from the highest rooftop when everything is all back up and running.

Wish me luck!



Copyright © 2007
PaperMoney Blog - www.paperdinero.com
All Rights Reserved

Disclaimer

Existing Home Sales Report: March 2007

Selasa, 24 April 2007

Not so fast Real Estate-Wall Street Bulls.

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for March showing the LARGEST MONTHLY DROP IN HOME SALES SINCE JANUARY 1989.

Of course, NAR Chief Economist David Lereah continues to attempt to blame winter weather conditions as well as fallout from the subprime meltdown for the current drop in sales.

“For the last couple months we’ve been expecting a weather ‘hit’ on home sales finalized in March, … We also may be seeing some losses as a result of the subprime fallout. … It’s too early to measure a significant impact from tighter lending standards, which should moderately dampen activity, but we’re still looking for existing-home sales to gradually improve during the last half of 2007”

Additionally, NAR President Pat Vredevoogd Combs continues to attempt to goad unknowing home buyers into making their purchase at the top of a dramatically deflating market.

“It’s a good time to buy, in part, because home buyers are not pressured to make quick decisions,” Combs said. “We’re in a window of low interest rates with a plentiful supply homes on the market and flat prices in most areas. First-time buyers now have more power to negotiate with sellers for help on downpayment or closing costs.”

Looking at March’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with virtually all regions showing considerable declines to median price and sales 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 suggested last fall.

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

Particularly notable are the following:

  • Majority of median prices are down.
  • Majority of sales are down.
  • Inventory and Months Supply show double digit increases on a year-over-year basis.


Lereah’s Fat Balloons

Kamis, 12 April 2007

I’m really starting to worry about this guy.

Imagine what it must feel like to have risen to such heights of success, both professionally and on a more personal metaphorical level, having achieved almost unparalleled success, save possibly for that of Greenspan, in the apparent pursuit of grotesquely inflating the nations housing markets only to stand by helplessly and watch the whole thing go shebang!

It’s obviously having an effect on the poor mans psyche.

Witness this video clip of him sitting in a Lakeland Florida hotel lobby, obviously trying to keep a stiff upper lip while rambling on about his new DNA theory of housing, the great “buyers” markets of Boston and Providence and the “hot” markets in the Smoky Mountains.

The piece sadly ends with Lereah attempting to educate CNBC’s Carl Quintanilla on the ins and outs of the nations “Fat Balloons”.

Oh! how the mighty have fallen!

I half expected him to sign-off that segment by making one of those old-time cartoon cuckoo gestures while singing “Hello my baby, hello my honey, hello my ragtime gal!”

Then yesterday came possibly the hardest blow to date.

In a press release entitled “Tighter Lending Standards Good for Housing, But Will Dampen Sales” Lereah had to admit that things are getting considerably worse for the nations housing market.

“Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections.”

More importantly, Lereah now expects the national median existing-home price to decline by 0.7% this year while existing-home sales will total only 6.34 million as compared to the 6.48 million home sales in 2006.

If this prediction were to come true, it would be the FIRST ANNUAL DECLINE to the national median existing-home price ever recorded by the National Association of Realtors.

To put this in better perspective, the smallest annual increase to the national median existing-home price ever recorded to date was in 2006 at 2.0%.

Additionally, Lereah is expecting new home sales to plummet to 904,000 from the 1.05 million sales in 2006.

So what’s next for Lereah?

Possibly a new edition of his book entitled “Why All Real Estate Keeps Following ME!: - And How I Just Can’t Get Away From It… Dammit! Stay Back! You Filthy Fat Balloons!”

For an always up-to-date take on the life and times of this truly unusual character read the ever popular David Lereah Watch Blog!



Copyright © 2007
PaperMoney Blog - www.paperdinero.com
All Rights Reserved

Disclaimer

The Trouble with Lereah

Jumat, 06 April 2007

Well, David Lereah’s new book is officially out… slightly modified subtitle from what fellow BubbleMeter blogger reported last fall but likely the same overall concept, namely how to profit from residential real estate.

In fact, that theme seems so essential to Lereah that it has, in one form or another, worked its way onto the front cover of every real estate book he has ever written.

First, there was his 2005 release titled “Are You Missing the Real Estate BOOM? Why Home Values and Other Real Estate Investments Will Climb Through the End of the Decade-And How You Can Profit From Them.”

Then quickly came the 2006 revision, “Why The Real Estate BOOM Will Not BUST – and How You Can Profit From It.”

Finally, now his newest installment “All Real Estate Is Local: What You Need to Know to Profit in Real Estate - in a Buyer's and a Seller's Market.”

Having not read any of his books, I’m certainly not qualified to make any real criticism of them, but what I do know is that Lereah has worked vigorously to promote the idea of profiting from residential real estate.

What’s wrong with that you say? This is America isn’t it?

Even if Lereah were to use every available means at his disposal to promote half-truths in an effort to create viral hype in the nations home buying population, isn’t that his right?

Buyer beware ... There’s a sucker born every minute and the like.

Well, I’d argue that Lereah and the National Association of Realtors have actually crossed significant ethical boundaries in an endeavor that I see as essentially analogous to the less-than-principled process of home sales itself, but on a grand scale.

We are all keenly aware of the extent to which many real estate agents will go to “make the deal happen” regardless of the fallout to the parties involved.

But in this case, what’s at stake is not a quick commission on the part of the agent or a reasonable deal for the buyer or seller; it’s the stability of the American economy and the future for many millions of its residents.

By narrating the events of the nations housing market in an “always and excessively favorable” light, the NAR and Lereah, through a lazy and willing traditional media, have played an important role in driving the “flipper nation” to the stratospheric heights that peaked in 2005.

Remember, the NAR is not a new organization.

It’s nearly 100 years old and as such has been collecting and analyzing housing data for many decades.

All the NAR leadership, including Lereah, are well aware of the fact that, in general, residential real estate appreciates roughly in line with inflation and incomes providing a reasonably stable, long term, “investment” but far from the “profit-laden” thrill ride they have made it out to be in recent years.

As Lereah himself stated last year, “Keep in mind that over time, home prices rise at the rate of inflation plus one-to-two percentage points -- buyers in most of the country who plan to stay in their home for a normal period of homeownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned.”



Copyright © 2007
PaperMoney Blog - www.paperdinero.com
All Rights Reserved

Disclaimer

Pending Home Sales: February 2007

Selasa, 03 April 2007

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February 2007 showing continued year-over-year declines in every region.

Additionally, the Northeast has fallen back below 100 indicating that February’s home sales activity was BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.

According to David Lereah, Chief Economist of NAR, the declines are as a result of bad weather and sub-prime slime:

“If it wasn’t for the unusually bad weather in February, we’d be seeing a better performance in pending home sales, … We also may be seeing some fallout from a decline in subprime lending, but a slight improvement in the more volatile month-to-month index is encouraging – the data suggests an underlying stabilization is taking place in the housing market, but it will take another month or two to clarify. Problems in the subprime mortgage market will become more apparent over time, and they will modestly depress the overall level of improvement in existing-home sales we expect as the year progresses,”

As usual, Lereah is having a hard time just accepting that sales are continuing to slide even on a year-over-year basis on top of last years historic fall-off.

Looking more closely at the results one might draw a less optimistic conclusion:

  • Nationally the index was down 8.5% as compared to February 2006.
  • The Northeast region was down 8.2% as compared to February 2006.
  • The West region was down 8.2% as compared to February 2006.
  • The Midwest region was down 9.7% as compared to February 2006.
  • The South region was down 8.0% as compared to February 2006.
So it appears that, year-over-year, contract activity is still dropping rather with ALL regions continuing to show significant declines.

The Second Shoe

Rabu, 28 Maret 2007

Something seems afoot…

While vetting clips for BNN last night it seemed that there was no end to the bad news for the housing market circulating the business media.

More importantly, the news was varied with respect to particular topic but perfectly unified in outlook.

First, there was the news of Lennar, the national home builder, reporting a 73% drop in profits in Q1 forcing them to cancel all earnings guidance for the foreseeable future.

"While we are primarily focused on fortifying our balance sheet, we are concurrently focused on rebuilding our profit margins. Given current market conditions, we are continuing to pursue cost reductions, SG&A savings, product redesign and proper land pricing in order to see margin improvement starting in the second half of 2007. Until we see prices stabilize, however, we will not be able to project the timing or the scope of margin recovery, or set earnings goals for the company." said CEO Stuart Miller.

Late day breaking news yielded more trouble for the nation’s home builders as it was reported that Beazer Homes USA was under a fraud investigation by the FBI, IRS, DOJ and HUD related to their internal subprime mortgage workings.

An FBI spokesman offered the following:

"there are potentially all sorts of fraud issues associated with Beazer to included corporate, mortgage, or investments in varying degrees."

Then, there was unquestionably the oddest occurrence I have yet to witness for the new home market when David Seiders, Chief Economist of the National Association of Home Builders was effectively positioned as the “Bear” in a classic Bear-Bull segment on CNBC.

Seiders again reaffirms his “ever revising lower” outlook for the remainder of 2007 currently calling for an 8% decline to new home sales for the year.

It’s important to note that Seiders, expressing true surprise about the effect that the subprime meltdown has had on his industry, has now revised his outlook four times since February.

“Late last year, early this year it really looked like housing demand had stabilized. Sales volume looked pretty stable, other indicators looked pretty good, the Fed concluded that the housing market was stabilizing… and then the entire subprime mess and everything that goes with it in terms of the mortgage market hit, and I’ve been not only following the homes sales numbers which clearly were rather disappointing to say the very least for both January and February, but also surveying the builders on an ongoing basis, both large and small, and I actually have been very surprised by the degree to which the builders say that the tightening of mortgage lending standards has already effected sales volume. We are really sort of in uncharted waters here, I think, in terms of the new leg of the weakening process and how far it will go.” said Seiders.

Next up was the January release of the S&P/Case-Shiller index again showing a precipitous and accelerating drop-off in home prices in most of the tracked metro markets.

Professor Robert Shiller had this to say about the results:

“[the index data] are a good indicator of the dire state of the U.S. residential real-estate market. The dismal growth in the 10-city composite is now at rates not seen since January 1994,"

Don’t forget to check out the S&P/Case-Shiller index tool for a dynamic visualization of the latest results for January.

Finally, there seems to be a dangerous head of steam building with respect to what the federal government’s response should be in cleaning up the home lending mess that has befallen the nation.

Multiple reports of proposed bailouts, new lending standards legislation as well as an FHA “modernization” initiative seem to indicate that we are now beyond the point at which the federal government can remain inactive.

More importantly, with many of the early presidential candidates, most notably Hillary Clinton, remarking on the subprime meltdown, it now seems likely we will soon see Congress attempt to put some teeth behind the latest rhetoric.

One can only hope that in a hectic attempt to help mitigate the massive wave of foreclosures now washing over the country, Congress doesn’t place the burden on the taxpayer to, in effect, bailout “shoddy” lenders and grotesquely wealthy Wall Street financial institutions in the name of unfortunate homebuyers.

Given all the above, I sense a bit of a “second shoe dropping” for housing.

It’s reminiscent of some of the days toward the end of last July and early August of last year when the general understanding that the spring market had come and gone with very poor results seemed to bring a general malaise over the market that was only lifted with Greenspan’s “Market Bottom” sentiment in early October.


Existing Home Sales Report: February 2007

Jumat, 23 Maret 2007

Yet again, the Bulls on Wall Street and CNBC waxed wildly optimistic with the initial “top-line” numbers of a report before delving into the details thoroughly enough to realize that they had gotten ahead of themselves.

Looking more closely at February’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with the majority of regions showing considerable declines to median price and sales as well as all regions showing significant increases to inventory and monthly supply.

In an attempt to squeeze as much press out of the top-line 3.9% increase to sales nationally from January, David Lereah, Chief Economist of the National Association of Realtors (NAR), expresses some surprise but is still cautiously pointing the finger at the weather for the other weaker numbers:

“Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers, … Even so, winter storms last month discouraged shopping, and buyers were chilled with the third coldest February on record. These unusual weather patterns mean home sales that close in March may decline before rebounding later this spring.”

Additionally, NAR President Pat Vredevoogd Combs offers this bit of convoluted logic mixed with consumer taunting:

“Over the last year, we’ve seen declining sales in many high-cost areas but rising activity in lower cost markets, … This change in the geographic composition of sales means we aren’t getting apples-to-apples comparisons in median home prices from a year ago.”

“What’s really happening is probably somewhere in between the different measures, but home prices are soft – a year ago we were still seeing bidding pressures and double-digit price growth, … Overall, home prices should rise slowly this year, and many buyers have an opportunity now that was only a dream during the five-year boom.”

Probably the most notable results from today’s report, beside the numerous median price declines, are the even more notable increases to inventory.

At this point, it seems fairly obvious where things are going in terms of inventory, especially in the more seasonal markets, but it will certainly be interesting to see how things shape up during March and April.

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

Particularly notable are the following:

  • Majority of median prices are down.
  • Majority of sales are down.
  • Inventory and Months Supply show double digit increases on a year-over-year basis.



Charting the Bubble (Slight Return)

Senin, 19 Maret 2007



Last year, I released the Office of Federal Housing Enterprise Oversight (OFEHO) Home Price Index Charting Tool that allowed users to mix and compare home price data from any number of over 400 statistical regions on the same chart.

Today, I’ve released the S&P/Case-Shiller Charting Tool which complements the OFHEO tool, allowing you to compare home price data from any number of the 22 different metropolitan and composite statistical series currently supported by Standard & Poor’s.

The S&P/Case-Shiller Home Price Indices, which is published monthly under agreements between Standard & Poor’s, Fiserv, and MacroMarkets LLC, provide a “reliable and consistent of housing prices in the United States.”

The “repeat sales” methodology used to calculate the indices was developed in the 1980’s by Professors Karl E. Case and Robert J. Shiller and is highly regarded by financial institutions.

In fact, it provides the basis of the Chicago Mercantile Exchange (CME) housing marketplace that has emerged over the last year.

The following excerpt taken from a CME Housing Market FAQ explains why the S&P/Case-Shiller is more accurate than both the National Association of Realtors (NAR) index as well as the OFHEO index:

There are two other major housing indexes: the National Association of Realtors (NAR) Indexes and the Office of Federal Housing Oversight (OFHEO) Indexes.

The NAR Indexes quote median values without recourse to a repeat sales methodology, which creates a significant potential for bias.

The OFHEO indexes do utilize a repeat sales methodology but are confined to Fannie Mae and Freddie Mac conforming mortgages, which are skewed to the lower end of the housing market.

This is a significant issue because only approximately one-sixth of housing in California is sold with a conforming mortgage. OFHEO indexes also utilize appraisal data to supplement their samples, which creates the possibility of bias that reflects the interests of those who are paying for the appraisal.

However, as all three indexes generally track the same phenomenon they are likely to move more or less in parallel.

So, what is the S&P/Case-Shiller Home Price Indices currently telling us?

Most of the country’s major metropolitan areas are registering significant declines after having experienced an unprecedented run-up in the last 10 years.

As Professor Shiller put it recently on CNBC:

“We are just emerging from the biggest housing boom in the history of this nation. It’s been driven by unrealistic expectations.”

Take a look at virtually any of the statistical areas and you will see roughly the same patter of huge surge, especially after 2000, followed by an abrupt rounded turn around in 2006.

The following are charts for some of the bubbliest markets:










NOTE TO FELLOW BLOGGERS – WEBMASTERS:

Both the OFHEO HPI Tool and the S&P/Case Shiller Tool now support two ways of dynamically linking so that you can integrate the charts into your blog or website.

You can link directly to the tool by simply building out the chart with the data your interested in, and then copying the URL link from the address bar of your browser and including it in your site.

Alternatively, if you would like to actually “embed” a dynamic chart (as I have done above… the chart view will actually automatically update when I update the data every month) into you blog or website do the following:

  • Build out a view of the chart with the data your interested in.
  • In the address bar of your browser, add the following to the URL: &width=300&height=300&ext=.jpg
  • In your web page, add an image tag with this URL set as the src.
Now, when your page is fetched, this “dynamic” image is fetched as well and the chart will always remain “up-to-date”.

Also, you can choose your preferred image size by adjusting the height and width and image format by specifying either .jpg, .gif or .png.

As usual, let me know if you have any issues or comments on both tools.

Pending Home Sales: January 2007

Selasa, 06 Maret 2007

Today, the National Association of Realtors (NAR) released their pending home sales report for January 2007 showing continued year-over-year declines in every region with particularly significant declines seen in the Midwest and South regions.

According to David Lereah, Chief Economist of NAR, the declines are as a result of weather “disruptions”:

“We are seeing temporary near-term weather disruptions in much of the country, but there is an underlying pattern of stabilization in the housing market, … As a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely. Housing remains a great long-term investment. The rapid shift in January to frigid air in much of the country had a cooling affect on home shopping that went beyond normal seasonal factors, … Weather disruptions have continued since.”

Just when you though things couldn’t get any worse for housing enter the “El Nino” effect!

Apparently, Lereah is having a hard time just accepting that sales are continuing to slide even on a year-over-year basis on top of last years historic fall-off.

As usual, looking more closely at the results one might draw a less optimistic conclusion:

  • Nationally the index was down 8.9% as compared to January 2006.
  • The Northeast region was down 1.3% as compared to January 2006.
  • The West region was down 7.0% as compared to January 2006.
  • The Midwest region was down 10.8% as compared to January 2006.
  • The South region was down 11.8% as compared to January 2006.
So it appears that, year-over-year, contract activity is still dropping rather with ALL regions continuing to show significant declines.

New Home Sales: January 2007

Rabu, 28 Februari 2007

Today, the U.S. Census Department released its monthly “New Residential Home Sales” report for January showing the third worst monthly drop-off in new home sales since the housing recession began.

This is particularly important as it has been suggested recently, most notably by Bob Toll, CEO of Toll Brother, that the new home market was finding a bottom.

Clearly though, this is not quite the case as every region showed a substantial decline to seasonally adjusted home sales from December of 2006.

Furthermore, nearly every region (save a small increase in the Midwest region) showed declines on a year-over-year basis with the West registering a frightening 50.4% fall-off.

Interestingly, even with the unseasonably warm weather that clearly had an effect on existing home sales, the Northeast fell back into the negative column (as I had noted last month, the December figure was revised down this month) for new home sales plunging 18.7% from December and declining 1.6% below the January 2006 results.

But easily the most notable decline comes from the West region where sales sunk 37.4% from December putting that region 50.4% below the results of January 2006.

So, we are now seeing significant declines on a year-over-year basis to the first month in 2006 where new home sales stared to show weakness.

This should not be understated as it is clearly showing continued and even accelerating weakness to new home sales.


Look at the following summary of today’s report:

National

  • The median price for a new home was down 2.0% as compared to January 2006.
  • New home sales were down 20.1% as compared to January 2006.
  • The inventory of new homes for sale increased 2.7% as compared to January 2006.
  • The number of months’ supply of the new homes has increased 28.3% as compared to January 2006.
Regional

  • In the Northeast, new home sales were down 1.6% as compared to January 2006.
  • In the West, new home sales were down 50.4% as compared to January 2006.
  • In the South, new home sales were down 11.2% as compared to January 2006.
  • In the Midwest, new home sales were up 0.6% as compared to January 2006.



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