Home Resale Inventory Another Record: NAR
The realtors association has the April numbers out. “Total existing-home sales, including single-family, townhomes, condominiums and co-ops, slipped 2.0 percent to a seasonally adjusted annual rate1 of 6.76 million units in April from a downwardly revised level of 6.90 million in March, and were 5.7 percent below the 7.17 million-unit pace in April 2005.”
“‘Right now, the numbers we are seeing are soft-landing numbers,’ Lereah said. However, he said the housing industry was closely watching the growing inventory of homes for sale. There were a record 3.38 million homes for sale in April.”
“Existing home sales were down in the four regions of the U.S. Demand fell 3.7% in the Midwest, 1.4% in the West, 1.9% in the South, and 0.8% in the Northeast.”
“The housing market peaked in August, said David Lereah, chief economist for the real estate group. ‘This may be the bottom. It appears May is a little better.’”
“Half of the country is cooling and half is heating up, Lereah said. Florida, California and Arizona are cooling, with inventories building up and prices beginning to fall. On the other hand, markets in Texas, the Carolinas, Ohio, Utah and New Mexico are gaining momentum.”
“Lereah continued to predict a soft landing for housing, but cautioned that the market is at a ‘delicate juncture.’ His group is closely watching inventories in the rapidly cooling markets.”
“Condo sales fell 2.7% in April to a seasonally adjusted annual rate of 839,000. Sales of single-family homes dropped 2% to 5.92 million annualized.”
“‘Existing owners in many cases are not willing to accept sizable reductions in their asking prices,’ Lynn Reaser, economist at Bank of America. ‘It depends on the particular set of circumstances but in this cycle we could see more of a price adjustment take place later this summer and into the fall.’”
“Federal Reserve policy makers are expecting a gradual cooling in the housing market to help relieve inflationary pressures, which may allow them to stop raising interest rates. ‘It was critical to get the housing market slower to get some froth out of the economy, and it appears that is happening,’ Michael Gregory, a senior economist at BMO Nesbitt Burns in Toronto.”
From the NARs’ PDF file; US resale inventory: in millions.
2.270..2003
2.224..2004
2.474..Apr. 2005
2.556..May 2005
2.678..June 2005
2.756..July 2005
2.841..Aug. 2005
2.772..Sept. 2005
2.868..Oct. 2005
2.924..Nov. 2005
2.846..Dec 2005
2.883..Jan. 2006
2.985..Feb. 2006
3.198..Mar. 2006
3.383..Apr. 2006
That’s quite a jump in listings this past month.
I noticed new home sale were up in April. Is it true that new home sales are reported based on escrow opening as opposed to existing homes sales that are reported as a close?
[i]“Half of the country is cooling and half is heating up, Lereah said. Florida, California and Arizona are cooling, with inventories building up and prices beginning to fall. On the other hand, markets in Texas, the Carolinas, Ohio, Utah and New Mexico are gaining momentum.”[/i]
Wow, this guy is an “economist” — there was just an article in the Austin Paper about how the only people left buying houses were from California. One half is cooling down, and the other half is still being propped up by the bubblist.
Interesting–it took 5 years to peak and only 9 months to bottom…what an idiot.
That’s what I was thinking! Seems like a very short down side of the cycle, given the long and astronomical upshoot.
He’s not an idiot, he’s a lying pr*ck. He knows it’s nowwhere near a bottom. He should be prosecuted after the crash.
c’mon David!
No matter what the results, I’m sure we will hear this same soft-landing euphemism BS from the NAR.
Call it what it is!
The RE industry is not a plane.
Soft-landing = declining prices!
Seriously reminding me of ol’ “Baghdad Bob” now…
In San Antonio, at least in my neighborhood northwest, houses are NOT moving. It also appears some construction has stopped on homes that were being built.
His assesment of Ohio is accurate. I know someone in the business down there. He tells me although the foreclosures are plentiful there is a lot of activity down there from the locals.
Bam….
new record in PHX 5/25/2006 47133
where’s the daily list? (devilish grin)
Seriously, you might as well tag us wtih the daily (or at least weekly or monthly) PHX inventory list on the next PHX thread!
so how soon until 50k?
clouseau
about 30 minutes.
“The housing market peaked in August, said David Lereah, chief economist for the real estate group. ‘This may be the bottom. It appears May is a little better.’”
The bottom? I think not. The bottom is still years away.
Its the Inventory Stupid!
David
http://bubblemeter.blogspot.com
Up 36.7% YOY. That can’t be good.
Uh, so you mean buyers couldn’t indefinitely go on paying 20%+ increases per year?
OT-
lainvestorgirl-
I think you were looking for something close to these numbers:
http://www.auraassetgroup.com/newSite/PropertyFiles/7327_Woodman_Ave.pdf
The market is ‘inventory-locked’.
Heh. Haven’t seen that expression for a while.
It will be fun to hear Lereah try and spin each new installment of disastrous news as “signs of a soft landing.”
What a goof.
All it takes is a few words from Dave Lereah’s forked tongue to twist the collective balls of this blogs readership. LMAO.
Bush has had yours in a twist for 6 years.
I prefer to torment you loyal worshippers by rubbing your dumb asses in his failures……. [smile]
See, this is what I’ve never been able to figure out. Just because we don’t hate the guy with a blinding passion doesn’t mean we “worship” him. But that expression gets used over and over by the other side.
Is that some kind of projection, or something? Do you ordinarily either hate or worship the people you vote for? Me, I’m happy when they’re simply adequate, or if nothing else, better than the alternative. (That’s about all GWB has going for him with me at this point.) I can’t think of a politician worth “worshipping” since Lincoln.
Thomas,
Those are my thoughts exactly. My sister works for a Senator and thus attracts conversation from people in places like the health club. One very liberal (self-acknowledged hedonist) person told her he’s longing for a strong leader, like a King, to just take over and fix everything. (That person was British).
Also, I’ve never voted for or against someone based on short-term economic happenings.
Lingus, your scatalogical obsession should be treated with counseling. I never read so much about ‘massholes’, rubbing butts, etc. Or perhaps you are trying to tell us something?
You better kneel when you approach the altar…. KNEEL!
Franklin Raines is a Dem as well as $90k guy in a freezer guy.
So is the unemployed construction laborer from MasssHolechussetts.
Maybe someone can answer this. Why is the refrigerator guy still taking up space and casting votes in Washington?
More to the point, why does Dennis Hastert think he needs to defend him? He’s bloviating about the congressional immunity clause. Note to Denny: Read the wretched thing. It only says Congresscritters are privileged from arrest (not from searches), EXCEPT in cases of felony, treason, and breach of the peace, and that you can’t be prosecuted for anything you say in session. Accepting bribes is a felony. And packing $90K of cold, hard cash in your freezer isn’t something that takes place on the House floor, and so it’s not privileged.
Why did I even bother paying attention in ConLaw if they’re just going to ignore what the Constitution actually says?
“The housing market peaked in August, said David Lereah, chief economist for the real estate group. ‘This may be the bottom. It appears May is a little better.’”
Mr. Lereah is, how shall I put this, out of his mind.
What value does he provide?
I believe history will regard him as the posterchild of this mother of all RE bubbles. He will justly receive all of the forthcoming venom to be spewed upon the NAR.
I see him like Bagdad Bob.
“There are no Americans here, not a single one!”
I have trouble believing his statement because of the reports of declining mortgage apps we’re seeing, especially for purchases. How can May be better if fewer people are getting loans to buy homes?
The Northern VA numbers have the May contracts number even worse than the April sales. It’ll only be two short weeks before we know the May numbers here.
Same in MD, and I think May will be the last month of price growth in the Balto metro area. I’m looking June or July for YoY declines…particularly if sellers continue to up their list prices and watch them sit.
‘This may be the bottom’
How many time do you think we are going to hear this one over the next few years?
When you stop hearing it, and everyone is talking about other things - anything but real estate - that will be the bottom. Oh, and when former realtwhores have got promoted to assistant manager at Walmart, that might be a good sign, too.
Actually, Lereah wasn’t lying. As he said “This may be the bottom,” he was secretly pointing to his backside. And when he appeared to say “It appears May is a little better,” he was referring to the fact that Mae West’s derriere was, indeed, better than his. Which is almost certainly true.
very funny
Only down 5.7% YOY, that doesn’t sound right. CA, PHX, LV were reporting 20-40% declines.
The must sample only “selected” markets…
So we have data provided by the NAR wolves, and the head NAR wolf Lereah “explaining” to the public that the catastrophic trends visible even in the NAR manipulated data are really “soft landing” indicators.
What a sham. For shame the media continues to misreport, and take at face value the data and claims provided by these hucksters.
That’s what Steven Corbert said.
36% YoY inventory increase is enormous… if sellers want out and keep dumping more homes on the market it really almost doesn’t matter if sales hold steady.
Which one of these buffoons is a used car salesman?
This one? http://tinyurl.com/k32sy
Or this clown? http://tinyurl.com/hc8wh
(“Total existing-home sales, including single-family, townhomes, condominiums and co-ops, slipped 2.0 percent to a seasonally adjusted annual rate1 of 6.76 million units in April from a downwardly revised level of 6.90 million in March, and were 5.7 percent below the 7.17 million-unit pace in April 2005.”)
I looked at the table. Without seasonal adjustment, sales were down even more year-over-year. Which confuses me, because since it is April vs. April in each case, seasonal adjustment shouldn’t matter.
The seasonal adjustment formula has itself been adjusted in the mean time. “How much is 2+2?” “How much would you like it to be?”
okay, seriously…I tried to google NAR seasonal adjustment calcs and couldn’t find anything. Does anyone know what they do to ’seasonally adjust’? Is it proprietary or what?
It amazes me they publish this. This is much worse than they want to admit. The YOY are less for two reasons (1) seasonal adjsutments - whatever that means (2) Adjustments to prior years numbers. Oh well - the shit is only starting to hit the fan. Soon it will be all over the place and no one can lie when they starting smelling like shit.
It probably has something to do with Easter/Passover. I would be surprised if Easter and Passover don’t affect when people buy homes. Since they move from year to year, the seasonal adjustment formulas should change from year to year in the spring.
And this gentleman is an economist??? “This seems to be a bottom”. “August was a peak”. Since when do economic lifecycles move in 9 months? Genius.
Well said, if only the media would include such commentary when quoting these NAR shills.
I don’t think the broadcast media and national papers are in bed with the realtors, they just aren’t very bright. As an undergrad I did a minor in communications for reasons still unknown to me (I thought it would be helpful with my Finance degree when I went to law school, I was wrong).
What I learned while taking Communications classes with all the potential advertisers and journalists is these people only studied their own industry and not much else. So, when there is business section in the paper or during a news show, ideally you would have people doing the reporting who have a background in economics and/or business. Instead you have people who went to college studying the media who then go ahead after graduation and work for the media. Therefore, we’ve got a bunch of journalists who really don’t know much about what they’re reporting, they report what they’re told basically and they don’t know how to ask probing questions.
well, then, the communications schools need to *teach* how to ask probing questions, and how to study any issue a journalist is hired to cover. Maybe there are too many journalists who weren’t sure whether it was advertising or investigating they were going to pursue, and treat their responsibilities as reporters as analogous to a gig selling stuff.
And they need to come to this blog to see through the realtor-speak.
Everyone get ready for the next RE Bubble. According to Lereah it starts today.
Here is my question. With unaffordable markets like MA and CA driving the people to move to cheaper areas (Like Southeastern Virginia), what will happen when the prices fall heavily in MA and other bubble areas? Will the people migrate back home? Or will they be unable to, as the home they presumably rolled their winnings into will have declined in value and will be hard to sell?
The region I’m in (Norfolk/Virginia Beach), the housing prices have to be driven by people from wealthier areas moving here. With a median home price at $360,000 and the median household income around $60k (down from 2001 when adjusted for inflation, according to the Virginian Pilot), things don’t add up. It started to go crazy around 2003. We’ve got a few major job loss announcements of higher paying jobs (Ford Plant), with no real wins.
I’ve worn my Mr. Housing Bubble shirt around, and no one gets it. One lady was going on about making a bubble beard in the tub when she was young. I was scarred by the image and the conversation.
This idea of spillover bubbles is pretty interesting. Another explanation that may not be as clear in the data is the effects of military pay. Norfolk/Va Beach is a huge military area and there is a big difference in pay when there is a war going on. Combat tax exemption means everyone over in Iraq doesn’t have to pay fed. or state taxes. They get separation pay, hazard pay, and countinue with tax free allowances for housing etc. The 60k median income might have grown substantially in the last few years through tax benefits and allowances. This is just a hypothesis/possibility as I dont have any official data to look into this.
On another note if Oceana is closed down by BRAC any bubble that exists in VA beach will be popped.
Oceana won’t likely close any time soon. Jacksonville doesn’t want the base and Virginia politicians won’t let it go without a fight.
But the bubble will pop here regardless of Oceana. Inventory continues to skyrocket and people keep building condos that no one can afford.
BTW, RDW..
Va Beach s/f/h’s up 70 more homes in 2 days! That’s 1712 to 1885 (10% increase) in 6 days!!!
Comment by VaBeyatch
2006-05-25 07:50:10
Here is my question. what will happen when the prices fall heavily in MA and other bubble areas? Will the people migrate back home?
___________________________________________________________
PLEASE? One can only hope. This would be a gift from God if it were to happen. I recall the last run-up in housing and the fallout in 1990. Clueless NJ/NYC white trash high-tailed it back to where they came from when they got pushed around enough economically. Many sold in the ensuing years, 91-96 at large losses. I think the fallout this time could be far worse. Let’s hope it is.
Massive migration underway to Vermont. Lingus, please conduct your business only in Vermont if it is so grand there. Stay with your state and never leave.
It’s not just price correction, RE related job growth is also behind 30 to 60% of new jobs added in CA, Boston, NJ, and Seattle during the past 5 years. Those jobs will all be gone. There were already enough realtors and loan brokers 5 years ago. With sales hitting 10 or 20-year low, even long time realtors and loan brokers will be squeezed.
According to CNN CA is creating smaller share of new IT jobs, so even if home prices in CA fall by 50%, there will not be that many new jobs for tech people.
Here’s my two cents, Beyatch:
The flippers don’t live there now and don’t intend to stay. So, in that respect HR will blow up just like other areas like the “inland empire” our Calif counterparts refer to.
The retirees will stay and keep coming. That will act as some sort of floor on how big a retracement HR gets, but it won’t prevent the bubble popping. Like I’ve posted, colonial Williamsburg is already 10% or so down.
I agree, baka. Once the flippers skedaddle, there will be precious few ‘regular people’ who can afford or qualify to buy a home. Couple that with the skyrocketing inventory and you have big ol’ bubble.
spillover bubbles are one of the solid foundations of the (much bigger, older and still spreading) European housing bubble.
First the bubble spilled from the big EU cities (often financial centres like London, Amsterdam) to smaller cities and later ‘the countryside’ at 100-200 km distance. Then it started spreading to less bubblelicious neighbour countries and/or favourite vacation destinations. And after that the bubble spread outside the EU borders to countries that could be EU members in future (Turkey, Eastern Europe) or even further away (Dubai, Florida etc.).
This whole process took 5-10 years (depending on which country you look at). I don’t think the US bubble will spread that much because most US citizens hardly travel outside their borders but still, this can go one for much longer than you imagine.
NHZ:
I have in-laws in Greece (remote area of the Peloponessus) who are shocked at what Dutch and German tourists are paying for scrubland fit only for goats. Should I plan on being able to pick up cheap land over there in 10 years?
I have no idea what is going to happen.
You can see this everywhere in the EU periphery: prices are outrageous by local standards, but because of the bubble they are ridiculously low for Dutch or UK buyers - so they keep buying, they can’t get enough of it. Dutch buyers often buy 5 or 10 apartments at the same time because they are ’so cheap!!’
On the TV news they showed a Swedish developer who was building luxury villas in Montenegro (ex-Serbia). On a natural terrace with gorgeous ocean views, probably high quality, nice swimming pool etc. - all that for 150K euros. The only locals who can afford that is the mob (= most politicians and businessmen …). But in Netherlands 150K is pocket change, even a simple garage costs already 50-75K euro and there is no way you could buy a decent home for 150K (I think just a similar building site would be 1500K euro over here).
My guess is that most of the foreign buyers are buying with their equity gains from older bubble areas, they keep piling leverage on leverage. So when the primary bubbles really crash we will have a crash of epic proportions. But there is no sign of a slowdown or crash yet, not at all
RE prices in Zurich, Switzerland are on par with San Diego.
Good–you don’t want most Americans travelling anyway, trust me
International opinion of us would be even worse…
“most US citizens hardly travel outside their borders”
If each US state was treated as a separate country, like Europe, Americans would be just as “traveled” as Europeans, if not more so. Just because a drunken British yob goes to the beaches in Spain doesn’t make him more “traveled” than Aunt Dottie from Stamford who goes down to Miami every winter.
Also, please go easy on those realtors on the HR housing blog… I want to be sure they keep posting their monthly data, so I can compare their sales prices vs. other sources’ listing prices, track sales volume, and watch for the YoY decline. Okay?
-Last- time the periphery took longer to start down and took longer to reach bottom, the same bottom of slightly less severe. That’s because -last- time was just a housing bubble, prices getting ahead, demographic pressure, economic cycle, yadda yadda. -This- time it is a credit (and probably liquidity) bubble that has manifested in housing. Do they use a different form of money in the periphery? If not, -this- time most places will get hit with the same factors. Some will do better for the reasons different this time. Santa Barbara is one of the most overpriced but with low turnover and extraordinary real wealth housing prices are not that important in the larger sense, contractors losing their jobs isn’t going to leave ghost neighborhoods in Montecito. Oxnard and Santa Maria is where the roofers and drywallers live. Las Vegas however is hosting a massive beanie baby convention. Beanie Baby traders, manufacturers, purchasers, and all the convention bartenders and hookers. Except substitute homebuilding for beanie baby.
Put the two together. Beanie babys are great, my kids have a lot and I still buy them at yard sales (I use them as computer network IDs). They just aren’t worth money. Trading two $20 beanies for one $40 is not an $80 transaction.
I love that beanie baby image…bubbles make houses seem to some (me!) exactly like beanie babies and thus not so compelling. When people pay silly prices for tiny little pieces of crap, based on the belief that someone else will want it at even higher silly prices, whatever ‘cuteness’ inhered in the commodity just kinda dissipates…
Anecdotal, and I don’t know how widespread, but I suspect likely.
I know a lady here in N. VA who bought a townhouse in VA Beach to rent out, then rolled over profits from anther flip up here to buy another rental property near VA Beach. (She couldn’t resist the temptation to do it again). This was in 2004-2005. Will rents keep them afloat . . .
FL numbers out too — not posted at the FL Realtors’ site yet (address: http://media.living.net/releases/archive.htm), but I saw them on PR Newswire. A nice “gentle” soft landing (ha-ha) decline of 31% year-over-year in April. Some markets (here in SE FL and SW FL) were down more than 40% or so. Oops.
wow!
by charting the april 05 - april 06 numbers it becomes clear that inventory is increasing after a flat period from aug-dec 05 and that a further increase in may is a foregone conclusion–
inventory is currently increasing at a rate of about 200K houses / month
So….
What he is trying to say is 18% appreciation is pretty much in the bag this year, right?
right???? … Uhhhhh…..
“The housing market peaked in August, said David Lereah, chief economist for the real estate group. ‘This may be the bottom. It appears May is a little better.’”
Amazing. After a 5 year run, they call the bottom less then 5 months after signs of weaknesses just START to appear.
This won’t be the last time they say ‘this may be the bottom’.
A jury on Thursday found Enron founder and former CEO Kenneth Lay guilty on all six counts of fraud and conspiracy charges while former CEO Jeffrey Skilling was found guilty on all securities fraud counts but acquitted of insider trading charges.
__________________________________________________
Replace these names with David Liar and Bob Troll in 3 years!
phoenix zip = 47,133
we seem to cross the next 1,000 threshhold every thursday.
the current run rate is 50k by mid june.
I think it would be useful to also post the inventory numbers as a percentage of the available housing stock when possible. It’s easy to get shocked by a number like 50,000 houses for sale but if it only represents a small percentage of the housing stock we shouldn’t get too excited. This leads to the question, what percentage indicates a melt down vs “healthy” inventory.
I believe Lereah said that anything under 60k is “healthy” in the Phoenix market. The thing to pay attention to is the rate of increase. At current prices inventory has risen from ~5k to ~45k in a year. Clearly this is not sustainable, nor is a “healthy” market. A healthy market would have some form of equilibrium.
hey don’t be too hard on lereah,he’s using both hands! i’m sure he’ll find the bottom eventually…..
ppppppp h h xx xx 47133
pp pp h h xx xx
pppppp hhhhhh xx
p h h xx xx
p h h xx xx
Inventory is up 37% YOY and buyers are scarce, but all the media can focus on is how strong new home sales were last month. Small wonder there is such a big disconnect between the average US citizen’s perceptions about the housing market, versus the implications of the ongoing inventory crash.
No kiddin! Inventory is 20849 and growing by about 50 to 100 homes daily. It’s fast approaching 21000 here in San Diego but you don’t see a peep of it in the UT.
You mean the same fish-wrap that earns a huge portion of revenue from the RE sections in the Sat/Sun editions?
The UT is complete crap.
You don’t like the UT’s Alice in Wonderland style reporting?
“Lereah continued to predict a soft landing for housing, but cautioned that the market is at a ‘delicate juncture.’ His group is closely watching inventories in the rapidly cooling markets.”
Later he will remind us all of how he warned about the hard landing in the areas where markets were rapidly cooling.
This moron should be thrown in jail. The bottom? He is so obviously lying, nobody could possibly be that stupid! Anyone want to stir things up and try and sue this chump?
I think it might be time to dig into his credentials to see if in fact it’s even appropriate to label him an economist. Did he do a thesis on how to publicly misrepresent numbers with a straight face?
Bank Branch managers here in SoCal have commented to me about continued CD redemptions and other large (multi-hundred thousand dollar) wire transfers to escrow companies out of state, mostly Texas. These are for purchase of investment/speculation. One comment was regarding a person buying 3 properties in Austin to “flip.” This trend seems to be continuing strongly…….
goodness I hope they lose lots…it’s so awful for regular people to have their markets manipulated like that.
They will double all the house prices in Austin and Houston…and those gains will double all the rest of the houses in the COUNTRY.
I think this bubble is just getting started.
Ha ha ha, the Cali people have been buying the homes here in Austin for a while and although it’s tightening the low end of the market, that’s where the builders can just keep building and building and building. Anyone buying a $170k house here in Austin thinking they’ll double their money is fooling themselves.
I’m sorry, but this continual stream of cheerleader drivel about “three-point landings” has finally driven me to quote von Mises in all caps, with some slight embellishments:
THERE IS NO [@#$ING] MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY [BULL$#!T] CREDIT EXPANSION [YOU MORONS]. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER, AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION, OR LATER, AS A FINAL AND TOTAL CATASTROPHE OF THE [@#$ FAKE] CURRENCY SYSTEM INVOLVED.
*exhaling* Much better.