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Media and Market Overreact As Usual to Weaker Housing Data

The mainstream financial media breathlessly proclaimed the worst housing data in x months this morning, on the release of the Commerce Department’s monthly new home sales data. I won’t go into the details of the reporting, which you have seen by now. I’ll just give you the facts and let you decide for yourself how “bad” this data was that all the pundits suggested was so disappointing.

New Home Sales – Updated 7/25/12

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In the Wells Fargo- NAHB builders survey, builders reported improved sales and increased traffic in July. Previously, in June they had reported a small downtick in both. That showed up in the Commerce Department’s data for June, reported on July 25. That surprised the market. It should not have, given the downtick in the builder survey for that month. Reflecting the builder survey, July sales should be up significantly when reported in late August.

NAHB Housing Market Conditions- Click to enlarge

NAHB Housing Market Conditions- Click to enlarge


Commerce Department New Home Sales- Click to enlarge

Commerce Department New Home Sales- Click to enlarge

New home sales chart updated July 25, 2012. Sales began their usual seasonal downtick but remain 18% above last year’s June level. The inventory to sales ratio is at its lowest level since 2005.

Prices downticked in June. New home sale prices are extremely volatile month to month, depending on the mix of price ranges going under contract. But median price was down 3.2% year to year, while the average price was up 0.3% year to year.  Recovery in new home sale prices is lagging the rebound in existing home sales, partly because median new house prices remain above the prices of existing homes at $232,600 versus $189,400 (NAR) . New home prices are down only 11% from the March 2007 peak while existing house sales are still down 17%. New home sale prices are regressing toward existing home prices. Note that near peak levels in June 2007 the median new home sale prices was only $6,500 more (2.8%) than the median existing home sale price.

New Home Sales Prices - Click to enlarge

New Home Sales Prices – Click to enlarge

Existing Home Sales – Updated 7/25/12 Existing home sales rose to 462,000 in June, a gain of 14,0o0 from May, and 5% better than June 2011.  The June gain was below average for the month of June, but the level of sales was better than every year since 2008 except for 2010 when sales were goosed by government stimulus programs. The gain in contracts in May suggests another gain in sales closing in July which could break the June 2010, government stimulated high.

Existing Home Sales Updated July 25, 2011

Existing Home Sales Prices and Volume - Click to enlarge

Existing Home Sales Prices and Volume – Click to enlarge

Listing prices and the NAR’s existing home sales, closed sale prices for May have already exceeded the 2011 highs established in June.

Permanent Housing Charts page, updated whenever new data is posted.

More in depth analysis, charts and data in the Wall Street Examiner Professional Edition Housing Market Reports

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here.