Posts Tagged ‘New Home Sales’

Burning Down the House; New Home Sales Consensus 330K, Actual 276K, a Record Low; Nationwide, Zero New Homes Sold Above 750K

Burning Down the House; New Home Sales Consensus 330K, Actual 276K, a Record Low; Nationwide, Zero New Homes Sold Above 750K

Courtesy of Mish 

I failed to comment yesterday on the huge miss by economists on consensus new home sales, but Rosenberg has some nice comments today in Breakfast with Dave.

Burning Down the House

Once again, the consensus was fooled. It was looking for 330k on new home sales for July and instead they sank to a record low of 276k units at an annual rate. And, just to add insult to injury, June was revised down, to 315k from 330k. Just as resales undercut the 2009 depressed low by 15%, new home sales have done so by 19%. Imagine that even with mortgage rates down 100 basis points in the past year to historic lows, not to mention at least eight different government programs to spur homeownership, home sales have undercut the recession lows by double-digits.

in the aftermath of a credit bubble burst and a massive asset deflation, trauma has set in. The rupture to confidence and spending from our central bankers’ and policymakers’ willingness to allow the prior credit cycle to go parabolic has come at a heavy price in terms of future economic performance. Attitudes towards discretionary spending, credit and housing have been altered, likely for a generation.
The scars have apparently not healed from the horrific experience with defaults, delinquencies and deleveraging of the past two years — talk about a horror flick in 3D. The number of unsold homes on the market exceeds four million and that does include the shadow bank inventory, which jumped 12% alone in August, according to the venerable housing analyst Ivy Zelman.

Nearly 1 in 4 of the population with a mortgage are “upside down” and as a result are now prisoners in their own home. We have over five million homeowners now either in the foreclosure process or seriously delinquent. The government’s HAMP program was supposed to bail out between 3 and 4 million distressed homeowners and instead we have only had a success rate of fewer than half a million.

Now back to the new home sales data. Every region in the U.S. was down, and down sharply. The homebuilders did not cut their inventory levels and as a result, the backlog of new homes surged to 9.1 months’ supply from 8.0


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New Home Sales Skew to Low-End

New Home Sales Skew to Low-End

Courtesy of Jake at Econompic Data

Bloomberg detail:

Sales increased 0.7 percent to a 429,000 annual pace, less than anticipated, figures from the Commerce Department showed today in Washington. The worst housing slump since the Great Depression may be drawing to a close as first-time buyers rush to take advantage of tax credits before a November deadline. Federal Reserve policy makers this week pledged to keep borrowing costs low to sustain the recovery past the time when the government stimulus measures wane.

“At least we continue to see an upward trend in place,” said Ellen Zentner, a senior economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “New-home sales are battling existing-home sale prices, which are incredibly attractive with the foreclosure pricing.”

Below is a chart showing how the new home market has dramatically shifted to the lower end market )or is it just that the values have shifted there due to lack of demand?).

new home sales breakdown

Source: Census

 


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New Home Sales in Perspective

New Home Sales in Perspective

Courtesy of Jake at Econompic Data

Stabilization? Yes.

But, I’m surprised by the surprise. By that I mean did the market think new home sales would keep declining at that torrid pace? If so, that would have meant negative sales at some point in the near future… not exactly possible.

new home sales

We’re still at levels last seen in 1979. A time at which the U.S. population was roughly 80 million people smaller.

So… good news? Yes, but I wouldn’t argue that this means the worst in overall housing is definitely behind us.

Source: Census

 


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WHAT’S ON TAP?

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WHAT’S ON TAP?

Courtesy of The Pragmatic Capitalist

This is the biggest week of the quarter in terms of earnings.  29% of the S&P 500 will be reporting and 750 companies in total report.  The docket is loaded with energy and materials firms.   Adding to this is a heavy slate of economic news:

  • Monday: New home sales
  • Tuesday: July Conference Board Consumer Confidence, S&P/Case-Schiller Home Price Index
  • Wednesday: June durable goods orders, Federal Reserve Beige Book, weekly crude inventories
  • Thursday: weekly initial jobless claims
  • Friday: Advance Q2 GDP, July Chicago PMI

The government is auctioning off an incredible $115B in short-term notes next week.  This could create the risk of higher yields and a skittish stock market.  At some point the demand for bonds is going wane and  yields are going to spike.

The risks in this market are rapidly increasing.  There is a deep feeling of complacency in the market.  The latest AAII sentiment reading came in at 38 – a fairly neutral reading, but up substantially in the last two weeks.  Meanwhile the recent rally has been on very low volume and very questionable fundamentals:

 

bberg

 

The rapid decline in the VIX and Yen also have me feeling a bit uneasy about the current move.  The majority of the strong tech firms and banks have released earnings.  Now we’re moving into the real economy names – energy, materials and consumer related names.  I don’t expect the news to be nearly as good as we get deeper into the earnings season.  We’re also moving into a seasonal period that is very weak for the stock market.  Investors always try to anticipate the scary month of October by getting out in September.  We could see a repeat this year, especially considering the disaster we saw last year.  This is a fast moving market.  I’ll adapt with it, but for now, I am standing pat on my bullish stance with the expectation of short sellers capitulating at some point in the next week or so.  That will be your chance to move to a neutral position or get short.  Stay tuned.

 


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Good News On Durable Goods Not Such Good News On New Home Sales

Courtesy of Tom Lindmark at BUT THEN WHAT

Good News On Durable Goods Not Such Good News On New Home Sales

I guess the meme that said we need to see housing rebound before we really start pulling out of the durable goods, new home salesrecession has been put on the shelf. A lackluster new home sales report for May was overshadowed by the durable goods report. The news is pushing up equities across the board.

Here is the news from the NYT on durable goods:

The Commerce Department said demand for durable goods rose 1.8 percent last month, far better than the 0.6 percent decline that economists expected. It matched the rise in April, with both months posting the best performance since December 2007, when the recession began.

Orders for non-defense capital goods, a proxy for business investment plans, rose 4.8 percent, the biggest increase since September 2004. That could signal that businesses have stopped trimming their investment spending.

The back-to-back monthly gains in orders for durable goods — items expected to last at least three years — were further evidence that a dismal stretch for manufacturers may be nearing an end. But analysts say any sustained rebound is months away.

“This is a pretty good report and welcome news in the hard-pressed (capital expenditure) sector,” M. Cary Leahey, an economist at New York-based consulting firm Decision Economics, wrote in a research note.

And also from the Times, the info on new home sales:

Still, new new-home sales dropped 0.6 percent in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000. Economists had expected a sales pace of 360,000 last month, according to Thomson Reuters. Sales were down nearly 33 percent from May last year.

The median sales price, $221,600, was down 3.4 percent from a year earlier but up 4.2 percent from April.

It’s probably a good idea to keep the durable goods order report in perspective. It’s a very volatile number, subject to significant revisions as well as wild month-to-month fluctuations. It’s nice to see an upward trend but part of it could be due to inventory rebuilding rather than strong end-user demand. Don’t get too excited.

 


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Mortgage Delinquencies Hit Record High, New Home Sales Disappoint

Courtesy of Tyler at Zero Hedge

Mortgage Delinquencies Hit Record High, New Home Sales Disappoint

Green shoots spinning in their grave – 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure. Half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure. And we still have to see the Option ARM hurricane. California, Nevada, Arizona and Florida accounted for 46 percent of new foreclosures in the country.

Also new home sales rise to a below consensus 0.3%, "up" from a majorly downward revised March decline of -3.0%.

Amusingly, homebuilder confidence climbed to an eight-month high in May. Mortgage applications to purchase homes are also up 9 percent from February’s nine-year low. We shall see how confidence fares now that mortgage rates are at pre QE levels.

 


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ValueWalk

Crescat Capital: The Reckoning Is Upon Us

By Jacob Wolinsky. Originally published at ValueWalk.

Decades of fiscal profligacy are culminating in an explosion of government debt that is poised to bring simmering monetary debasement to a boiling point. Central bank interventions have aided and abetted reckless government spending that has obfuscated poor underlying organic growth fundamentals. Instead of laying zero groundwork for future real economic growth, monetary authorities have fostered a euphoric investment environment with delusional asset valuations. Paradoxically, we are past the point of no return where the stimulative policies that have created this frenzy are the death knell for the economy. The world is suffering from a debt overdose. It now must face the inevitability of collapsing financial asset pri...



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Phil's Favorites

Benchmark Capital's Chetan Puttagunta Joins Me On Panic With Friends - As Software Eats The World - How Hungry Is Open Source?

 

Benchmark Capital’s Chetan Puttagunta Joins Me On Panic With Friends – As Software Eats The World – How Hungry Is Open Source?

Courtesy of Howard Lindzon

I am fascinated by the software sector and lately the open source category of software.

I started down this rabbit hole back in January 2019 and covered it here.

Wired magazine just put out this ‘opinion’ piece titled ‘...



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Kimble Charting Solutions

Key Inflation Indicators Facing Big Test In September!

Courtesy of Chris Kimble

Inflation has long been a word that the Federal Reserve uses but the general markets have forgotten about.

Why? Well because it’s been virtually non-existent for years. Key indicators like commodities (i.e. copper) have been in a down-trends and the Materials Sector (XLB) has lagged… until this year.

In today’s chart 3-pack, we take a look at the Equal Weight Commodity Index, ...



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Zero Hedge

Sweden Dominates Drug-Deaths In Europe

Courtesy of ZeroHedge View original post here.

As highlighted by the latest edition of the European Drug Report, Sweden is the country with the most drug-induced deaths per million of the population in Europe.

In 2018, 81 people died per million inhabitants, ahead of the United Kingdom's 76 drug-induced deaths per million. Finland and Ireland jointly had the third-highest death rate with 72 deaths per million.

You will find more infographics ...



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Politics

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

 

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

"If you can't get a Covid test or find an N95, it’s because these contractors stole from the American people to make faster jets and fancy uniforms."

By Jake Johnson

Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff Army Gen. Mark Milley hold an end of year press conference at the Pentagon on December 20, 2019 in Arlington, Virginia. (Photo: Drew Angerer/Getty Images)

Instead of adhering to congressional inten...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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