New housing sales fall 11% in November
posted at 1:36 pm on December 23, 2009 by Ed Morrissey
This news may surprise some who heard yesterday that the housing market grew 7% in November, but that was the resale market — which has a key difference in measurement. Resales get calculated when the sales close, where new housing sales get calculated when the deal is made:
Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky.
The 11 percent slump from October’s pace shows that consumers are taking their time following an extension of a deadline for first-time buyers to qualify for a tax credit. The incentive was set to expire at the end of November, but Congress pushed back the date to April 30 and expanded the program to include current homeowners who relocate.
“They don’t have to act today,” said David Crowe, chief economist at the National Association of Home Builders, who called the results “pretty awful.”
New home sales data are a better indicator of future real estate than sales of previously occupied homes, but capture a smaller slice of the market. The new home figures tally sales agreements signed in November, while home resale numbers reflect contracts signed over the summer that were completed in November.
In other words, it measures two different sets of times. The resale numbers reflect decisions made anywhere from one to four months earlier by buyers, and the November closing figure reflected the increased optimism during the mid- to-late summer of 2009. That optimism has disappeared, and with it the impetus to buy any of the new inventory in the market.
That may signal an end to the influence of a key Democratic economic stimulus strategy. The tax credit for first-time homebuyers was intended to get inventory lowered, which it accomplished by essentially stealing sales from future quarters as people jumped into the market a little earlier than they may have otherwise. An $8000 tax credit would not have been enough to make a house affordable that wouldn’t have already been affordable to the buyer, at least not in large enough numbers to promote home sales that would have otherwise taken place later.
When new housing starts dropped in October, Congress assumed that the issue was not market saturation but the end of the tax credit. They extended the credit to April 2010 and widened it to existing homeowners who buy new houses. Instead of getting a rush to buy, the market turned sour anyway, demonstrating that the only real impact of the Cash for New Homes program was to move purchasing decisions up a few months, not to create sales that would not have taken place anyway.
Finally, with all of that in mind, it’s amusing to see the AP continue to use the word “unexpectedly” in its economic reporting. This was actually easily predictable.
Blowback
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The broken window economy.
lorien1973 on December 23, 2009 at 1:39 PM
Historical, unprecedented, unexpectedly and surprisingly, come on people, someone invest in a Thesaurus.
Cindy Munford on December 23, 2009 at 1:41 PM
And FU people that lived in their house for over two years and plan to continue to do so.
WashJeff on December 23, 2009 at 1:41 PM
People bought fixer-uppers instead? Well, insulation is sexy.
Wethal on December 23, 2009 at 1:42 PM
New jobs bill to distribute sledgehammers to SEIU to create jobs.
WashJeff on December 23, 2009 at 1:42 PM
Really, the “program” for first time buyers amount to less then $25 a month savings, when looking at buying a house and paying $1500 a month, the incentive isn’t that great to motivate but a few people.
And that $25 will be eaten up in new taxes next year…Obama and his “geniuses” are so far behind the curve in reviving this economy it is embarrassing to think he actually graduated from high school, let alone college, and even still has a law degree.
right2bright on December 23, 2009 at 1:43 PM
Unprecedented!
DamnCat on December 23, 2009 at 1:44 PM
Let me be clear. Make no mistake. The time for talk is over. We’re on the precipice of some new adjectives and adverbs.
Drained Brain on December 23, 2009 at 1:44 PM
Because I like my five year home, I need to subsidize others.
Because my home is well insulated, I need to subsidize others.
Because I like driving my truck that is paid off, I need to subsidize others.
Because my appliances are relatively new and effecient, I need to subsidize others.
Because I work to support my family, I need to subsidize others that choose not to.
WashJeff on December 23, 2009 at 1:45 PM
On the precipice of recovery!
FAIL.
NickTx on December 23, 2009 at 1:45 PM
No wonder Obama is in a hurry to get to Hawaii.
ctmom on December 23, 2009 at 1:45 PM
it’s up there with dear leader’s ‘let me be clear’
cmsinaz on December 23, 2009 at 1:46 PM
Bestest, most competent administration, evah!
THEY’VE BEEN UNPRECEDENTED IN THE NUMBER OF FORECASTS THAT THEY’VE SCREWED UP!
Guess they need a new set of ‘rose colored glasses’. Maybe that will help. HEY AP, more ‘green shoots’ stories. That will turn the economy around!
GarandFan on December 23, 2009 at 1:46 PM
Great news! It makes sense. Lower new home sales is good news if you know anything about economics. We can only hope that the number of people losing jobs will continue to slow. Lost jobs is sure sign of recovery. The Recovery that was reported back in June continues unabated! STIMULUSMANIA!
/trolls
mankai on December 23, 2009 at 1:46 PM
There aren’t any savings. The entire $8,000 credit has to be paid back in equal payments over 15 years just like that $4500 bucks for cash4clunkers money that has to be claimed as earned income in 2010.
Bait and switch at it’s finest.
Knucklehead on December 23, 2009 at 1:47 PM
Congrats, that was the best comment on the thread.
jbh45 on December 23, 2009 at 1:48 PM
Hey just because you have a great house.. doesn’t mean I don’t want one toooooo!
Actually I HAVE to start moving up soon. The house is becoming overly crowded and I may have to take action before the time bomb explodes.
Just because I am looking doesn’t mean the housing prices are coming down in my neck of the woods.
upinak on December 23, 2009 at 1:49 PM
“Unprecedentedly.”
Enoxo on December 23, 2009 at 1:49 PM
True.
upinak on December 23, 2009 at 1:50 PM
Out here in socal we have something like 10,000 new homes to sell before we see any climb out of the red….thanks Barney.
jbh45 on December 23, 2009 at 1:50 PM
POI… The $7500 from 2008 has to be repaid. The $8000 for 2009-2010 does not… but it is claimed as taxable income.
Yes, I’ve checked with the IRS (by phone)… the distinction is laid out clearly at irs.gov.
mankai on December 23, 2009 at 1:51 PM
The “experts” were unavailable for comment.
Probably spending winter holiday at their Swiss villas.
JammieWearingFool on December 23, 2009 at 1:51 PM
Unexpectedly, the Rams lost last week.
mankai on December 23, 2009 at 1:52 PM
Well you’re a very nice gentleman.
BadgerHawk on December 23, 2009 at 1:53 PM
Can we revoke Tim Geithner’s “Person of the Year” award?
JammieWearingFool on December 23, 2009 at 1:53 PM
Welcome to the recovery-less recovery!
ExUrbanKevin on December 23, 2009 at 1:54 PM
This statistic is racist
faraway on December 23, 2009 at 1:54 PM
Well, they never said it was a recovery-recovery.
mankai on December 23, 2009 at 1:55 PM
Barack Obama today unexpectedly made a historically unprecedented two-minute statement without the aid of his TelePrompter, which unexpectedly malfunctioned, puzzling experts.
JammieWearingFool on December 23, 2009 at 1:55 PM
So, anyone who was in a position to close a deal, jumped at it right away to get the “free” $8000 before the opportunity went away and fewer people are looking for homes now. Basicaly we blew a buncha cash to make the numbers look good for a month.
Mord on December 23, 2009 at 1:55 PM
Are you sure, from the IRS site.
WashJeff on December 23, 2009 at 1:56 PM
This is good news for squatters, meth producers and copper thieves. Guess it’s time to head to Cabela’s for another package of sporks.
Bishop on December 23, 2009 at 1:56 PM
No, because using the new math… without the stimulus, sales would have dropped 212%. The administration saved or created 300 trillion new home sales (estimated).
mankai on December 23, 2009 at 1:57 PM
The thank you Christmas cards from those receiving my money are just rolling in this week.
WashJeff on December 23, 2009 at 1:57 PM
Merry Christmas!
Safe travels and enjoy!
cmsinaz on December 23, 2009 at 1:57 PM
Did they count the new homes sold in North Carolina’s House district 98? Sales were WAY UP there.
mankai on December 23, 2009 at 1:59 PM
Predictably unexpected, unprecedentedly repetitious.
CK MacLeod on December 23, 2009 at 2:00 PM
Hey Richie Rich, why the hatred? Obama says you’re a racist. Biden says you are unpatriotic. Pelosi says you are a hatemonger. Harry Reid says you don’t care about the less fortunate. How can they be wrong?
/sarc
ihasurnominashun on December 23, 2009 at 2:00 PM
I just found out another of my friends in Colorado lost her job a few weeks ago. Using basic economic principles the economy won’t get any better for her, or others looking for work next year. I wish we had someone in this administration and Congress who actually understood economics and could address the real issues. Instead we have people who apparently got their college degrees from degree mills.
MeAlice on December 23, 2009 at 2:00 PM
Fiddle Washington, fiddle. 2010 will be a good year, just not for you schmucks, all of you.
Schadenfreude on December 23, 2009 at 2:01 PM
Totally correct.
2009: Just stay there for 36 months
2008: Repayr over 15 years
< 2007: Subsidize those homebuyers in 2008 and 2009.
WashJeff on December 23, 2009 at 2:02 PM
meanwhile…
existing home sales UP 7% in November to the highest level in 3 years
gatorboy on December 23, 2009 at 2:02 PM
***
One more of the “unintended consequences” of the CRA / Fannie / Freddie forced loan and gubmint loan guarantee policies comes home to roost.
***
You don’t have to be a Rocket Scientist or Ace Economist to figure out that the building boom bubble and wild price climbs caused much overbuilding. Many few-year-old good homes are now available at 20%-30% reduced prices, as are many defaulted mortgage houses. Economics 101–supply and demand–says that new building–at still overpriced costs–will suffer.
***
They don’t call Economics the DISMAL SCIENCE for nothing.
***
John Bibb
***
rocketman on December 23, 2009 at 2:02 PM
Explain. Under-reported scandal in the Charlotte metro?
SouthernGent on December 23, 2009 at 2:03 PM
Um, yes, we knew that.
mankai on December 23, 2009 at 2:05 PM
I would love to see further decreases of home prices in IL to get my property taxes down. Unfortuantely there are no comparable sales since the only homes that sell are foreclosed ones, and in IL those do not count as comparable properties.
WashJeff on December 23, 2009 at 2:05 PM
Thanks for the clarification. I’m big enough to admit I made a mistake unlike the man in the White House.
Knucklehead on December 23, 2009 at 2:05 PM
As soon as our population octuples and we get 98 seats, I’ll tell you.
;)
mankai on December 23, 2009 at 2:07 PM
I wish more threads would spin off into comedy land. The lack of trolls is nice, too.
BadgerHawk on December 23, 2009 at 2:08 PM
How about ‘gloomy’, ‘woe’, ‘ineptitude’ and ‘disaster’…
trigon on December 23, 2009 at 2:08 PM
OK, now you owe me a Pepsi clean up on the computer monitor. Property taxes don’t go down in Crook County. Now sit down, shut up and go feed the parking meters. LOL
Knucklehead on December 23, 2009 at 2:09 PM
Existing home in CO going cheap!
mankai on December 23, 2009 at 2:09 PM
BadgerHawk on December 23, 2009 at 2:09 PM
It’s inconceivable!
rollthedice on December 23, 2009 at 2:10 PM
I’m in the process of interviewing for an entry-level position and am seeing resumes from people with 20+ years experience who were making two to three times the likely salary.
When I fill the position next month I’m sure Obama will call it a job saved.
JammieWearingFool on December 23, 2009 at 2:11 PM
Oh! I thought you were talking about the STATE HOUSE district 98. Shew.
SouthernGent on December 23, 2009 at 2:11 PM
The adults be in charge. Get over it Conservatives, the economy is perfect. Way better than when Bush was in charge. Heck, when Bush was in charge, you could barely invest your money and get a higher than prime rate return. Now things are so great, the government is just going to give you a house. (The ten foot chain link fence is to keep the bad guys out, not you in, wink wink)
Yeah, and everyone will have free healthcare. For only 15,000 a year and a measly 2.5 percent increase in your annual taxes. It’s free free free!!!
CUE THE ACCORDION!!!!
Every thing’s coming up roses….
hawkdriver on December 23, 2009 at 2:12 PM
You know, I actually was worried about that distinction… but I took a shot anyway.
mankai on December 23, 2009 at 2:13 PM
As a fellow Illinoisan, I have to ask. When will property taxes EVER go down? They are bleeding us to the max and every public institution is crying for more money.
I want home prices to increase, so I can sell my home and get the hell out of here!
donh525 on December 23, 2009 at 2:13 PM
Actually they did for me one year. I lived in a townhouse in Des PLains (Around Dee Rd. and Golf Rd.) starting 1996. Around 1998 my tax bill was less than the previous year. Shocked me…thought it was a mistake.
My taxes payable this year went down in Will..a whooping $70 on a $10K bill.
WashJeff on December 23, 2009 at 2:13 PM
Worked for FDR. He got by with nothing to show for his tax and spending increases by cuing up “Happy Days Are Here Again” for the first 8 years of his administration… until the war started.
mankai on December 23, 2009 at 2:15 PM
If you job keeps you in the area, go to IN (I work in IN). Gov. Mitch Daniels (R) has implemented property taqx caps based on home value, as follows:
- Homes: 1%
- Businesses: 2%
- Investement: 3%
Property taxes are about 40% to 50% less in IN than IL. Education is practically as good in IL…since we know it is families that matter, not $ per student.
WashJeff on December 23, 2009 at 2:16 PM
That’s my plan too. Living here is fun, but it’s just not worth the money anymore.
BadgerHawk on December 23, 2009 at 2:16 PM
Unexpectedly, some people actually are still employed.
Obama=FAIL
search4truth on December 23, 2009 at 2:17 PM
A 1% property tax bill would be awesome.
BadgerHawk on December 23, 2009 at 2:18 PM
What they are really saying is that, because they bought into the idea of ‘Hope and Change’ this is really “Unexpected”.
What was “Expected” by the rest of us is that Hope and Change wasn’t, and isn’t, working
PappaMac on December 23, 2009 at 2:19 PM
Sweetie *Hugs* and here is a ginger snap.
FYI, Alaska home (anywhere in Alaska) have only gone down once (early 80′s recession) and they will never do it again. I will pay out the nose or I will be one of those people buying a foreclosed house.
BTW I really don’t want to buy a forclosed house. I want a brand spanking 5 star one. But I don’t want to pay 225K for a 1100 sq ft house, with no garage! I am looking out, over by where Palin’s town is. Actually I am looking more towards the mountains. I don’t have to pay for water like I do here.
upinak on December 23, 2009 at 2:20 PM
God, I wish my tax bills were only 10k.
donkichi on December 23, 2009 at 2:20 PM
Don’t forget that where you may buy a home the prices may be depressed there too. So while you may not get what you want from your home, most likely neither will the seller you buy from.
Also, if you buy a foreclosure home, you may be much much better off. I have heard about the price and size\quality of foreclosed homes sold in IN and it is amazing. Homes that were originally $750K four years ago for $560K. That is huge % drop in price.
WashJeff on December 23, 2009 at 2:21 PM
Awe MAN! You didn’t tell me Weird Al Yankovic was in here!!!
I wanna here “Like a Surgeon”!
upinak on December 23, 2009 at 2:21 PM
Even when the news is obviously bad they still try to find a way to spin it. Still assuming there’s going to be a housing recovery at all…gotta laugh.
Housing prices won’t see a stable bottom until the banaks are forced to price these loans at mark-to-market (Meaning all those HELOCs they underwrote will be effectively worthless since they’re subordinate to the first lien). When the banks can no longer play games like putting off foreclosure sales we’re going to see a catastrophic plunge in prices.
Well, catastrophic for sellers at least. People like me will be more than happy to snap up a property free and clear for less than a year’s salary.
TheMightyMonarch on December 23, 2009 at 2:21 PM
I’m retired and have lived here (southern Illinois) my whole life. It used to be a wonderful state to live in. Not anymore.
Our business is also located here and the impetus to move grows with each passing day.
donh525 on December 23, 2009 at 2:22 PM
Only if you are retired or don’t need a job. IN doesn’t have much in the way of employment.
upinak on December 23, 2009 at 2:23 PM
DuPage or Lake county?
WashJeff on December 23, 2009 at 2:23 PM
That is what I am trying to shoot for. Get out of whay I have, and buy new or pretty dang close to it.
upinak on December 23, 2009 at 2:23 PM
How about we abolish property taxes so “homeowners” can stop pretending that they actually own their homes, and actually own a house outright instead of renting it from the state government.
I’ll say it again…property taxes are the most repugnant, immoral form of taxation ever devised.
TheMightyMonarch on December 23, 2009 at 2:25 PM
So. Illinoisians just have to despise Cook county. This state would be soooooo different without that county.
WashJeff on December 23, 2009 at 2:25 PM
I was smart and bought at the market peak in 2006, so I don’t have to worry about depressed home prices right now.
Buying a foreclosure makes sense economically, but I’d rather build and have something I really like, especially if new home sales stay weak for the next year or two and I can get materials at low prices.
BadgerHawk on December 23, 2009 at 2:25 PM
Then it’ll work for us too.
CUE THE BAGPIPES!!!
Hap-py day are here again,
The skies above are clear again,
The Donks will give us free beer and gin,
Happy days are here again!!!
hawkdriver on December 23, 2009 at 2:25 PM
Here here. It is number one on my list of Most Hated Taxes.
WashJeff on December 23, 2009 at 2:26 PM
No WAY!!!
The recession is over! Obama’s spend and spend and spend bought us close to $60 billion growth in GDP in 3 qtr 09!
This will not be pleasant.
It will not end soon.
jukin on December 23, 2009 at 2:26 PM
I wish I had that problem. I’d sh!t my pants if a tax bill for 10k showed up.
BadgerHawk on December 23, 2009 at 2:26 PM
Fixed. Good God I need a nap.
TheMightyMonarch on December 23, 2009 at 2:27 PM
You guys need to move SOUTH.
donh525 on December 23, 2009 at 2:27 PM
They want to do that here in Anchorage, The one catch. Abolish property taxes.. pay 13% sales tax on everything… and I mean EVERYTHING! Including food.
That doesn’t help anyone. And they will go right back to property tax when they can!
upinak on December 23, 2009 at 2:28 PM
Thanks so much for the boxes. We have something planned to acknowledge the generosity of you all.
hawkdriver on December 23, 2009 at 2:28 PM
Oooooo..one of those types. Me too! I would also rather build my house, customize it to my wife and my needs, and stay there for 15 years.
WashJeff on December 23, 2009 at 2:29 PM
Hawk AWESOME! I am soooo glad you guys got them. I hope you got Cindy’s and Ladyingrey’s as well.
Enjoy, Merry Christmas too you, your troops and your families!!!!
upinak on December 23, 2009 at 2:30 PM
meanwhile…
existing home sales UP 7% in November to the highest level in 3 years
Sales were up 44 percent from a year ago, the highest annual gain since the group started tracking the data in 1999.
gatorboy on December 23, 2009 at 2:02 PM
—–
I don’t believe you’re remotely genuinely asking anything.
That said, there’s a couple things that need .. clarifying .. about this number because, by itself, it looks good.
First, year-end is the slow time in the real estate market – this is like comparing sales of fake christmas trees for April year over year. It’s not the time most trees are sold – this metric represents, generally, people who were too overpriced during the spring, or who are selling due to a personal reason – selling grandma’s cottage now that she’s in a nursing home, forex.
Second, November 2008 was an unusual year. Nobody knew what new POTUS-elect Obama was going to do to “fix” everything, so where possible, people didn’t buy.
Third, November 2009 was an unusual year. A lot of houses sold with first-homebuyer $8000 closed in November.
So, we’re comparing sales in an unusual season, and for two years that are unusually skewed.
Sure, it looks good, Gatorboy. So did the Denver Parthenon set. Like that set, though, it’s a bit hollow. No depth here.
Mew
acat on December 23, 2009 at 2:30 PM
I throw out the pants I was wearing on the day my property tax bill comes in.
WashJeff on December 23, 2009 at 2:30 PM
Actually, I was born in Cook county. Fate and my parents divorce caused me to end up on a farm in So. Illinois.
Cook county area is a different world than So. Illinois.
Chicago a different planet.
donh525 on December 23, 2009 at 2:32 PM
That’s what I’m going to do too. Sink almost every penny I have in a country property that I can put my art studio on and a building to produce my pieces. I hope quickly enough before my saving are completely devalued under these buffoons, er adults. ADULTS BE IN CHARGE…
Happy days are….
hawkdriver on December 23, 2009 at 2:33 PM
Interesting. In AK you have a unique, sans HI, situation, shopping across state lines is really not an option. Not knowing the rates in AK on sales and property, I support this since all people are treated equally. Raising sales taxes will be harder than property taxes also.
The really reform is on the spending side.
WashJeff on December 23, 2009 at 2:34 PM
Chaos! You know, now that I look at this verbal Rorschach, it appears to me that Dems might need to be get some help with their overly pessimistic outlook on the world.
Cindy Munford on December 23, 2009 at 2:35 PM
Why not longer?
upinak on December 23, 2009 at 2:41 PM
My bad, it is after midnight here in Kandahar and I am a bit tired and loopy.
I was thinking total tax bill, not just pooperty taxes. Fortunately in VA a 10k property tax bill would likely indicate that I owned a vineyard or some such non-sense. Average house out here is putting you in the property tax hole about 2~3k a year.
Hawk, you out in this AO?
donkichi on December 23, 2009 at 2:42 PM
This is the fault of the Fat Cats in construction.
TN Mom on December 23, 2009 at 2:45 PM
What is average. I pay over 3 for a house worth 160K.
upinak on December 23, 2009 at 2:49 PM
I’ll give you a hint. I had kabbob and Naan at the boardwalk tonight. Are you military or civilian?
hawkdriver on December 23, 2009 at 2:49 PM
Longer too. I do not plan to move from my house until my youngest is out of high school (circa 2023). So that would be 20 years. Then I am high tailing to lower tax pastures.
WashJeff on December 23, 2009 at 2:51 PM
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