Media shocked by “unexpected” record low in new home sales

posted at 1:13 pm on February 24, 2010 by Karl

Yes, Reuters says the magic word:

Sales of newly built single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery.

Potential trouble? Really? Today’s figure is the worst since they started keeping records in 1963. As Daily Finance’s Joseph Lazarro notes:

[H]istorically, increases in home sales are strongly correlated with greater demand and an economic expansion — and decreases are linked to the opposite. However, government statisticians also caution that the new home sales figures contain a margin of error and are subject to revisions. Further, economists note that it typically takes three to five months to detect a trend, so investors should not read too much into data from one month.

Unfortunately, new home sales also dropped “unexpectedly” in December. That followed November, when new homes plunged “unexpectedly” to the lowest level since April. Indeed, new home sales have been trending downward steadily since August.

In related news, the Mortgage Bankers Association says that mortgage applications declined by a seasonally-adjusted rate of 8.5% last week. Michael Fratantoni, MBA’s Vice President of Research and Economics, attempts to place the blame on the snowpocalypse that gripped the East Coast. Similarly, the Associated Press pre-emptively blamed the weather for the latest drop in consumer confidence, which also turned out to be “unexpectedly” bad. But there were no blizzards in August, when the housing market started falling. Unemployment increased and remains persistently high. Very little of that has to do with the weather. As John Carney notes:

The story-book recovery was dependent on a recovery of the consumer and a decline in the saving rate. If consumers lost some of their apprehension about future income prospects and future employment, they might begin to spend more on both retail goods and to purchase homes again. Anticipating this return of the consumer, businesses would increase capital spending and inventory.

We got the last part, but not the first part, raising the possibility that the recovery on the business side will falter, sending the country into a double-dip recesssion. That this malaise is occurring despite the extension and expansion of the homebuyers’ tax credit suggests that Americans are casting a vote of no confidence in Obamanomics.

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Comment pages: 1 2

Sarah2053 on February 24, 2010 at 2:53 PM

Howdy neighbor!I work near Chester. I guess my statement about the numbers of foreclosures was incorrect. Was basing that on my neighborhood and the lack of redcution of my real estate bill.

We MUST foreclose on the non-performing home loans, and I agree with RSquare that we have a massive overhang in housing supply.

Right now the gubmint is trying to walk a fine line and support home prices to help the banks stay solvent.
Not unexpectedly, the gubmint policies caused this price inflation through fiscal and monetary mismanagement.

riverrat10k on February 24, 2010 at 3:11 PM

Where’s Jimbo3 to mine out the atomic particles of good news in this report for us?

Chuck Schick on February 24, 2010 at 3:19 PM

“shooting trespassers trying to kill my cows for food.

Badger40 on February 24, 2010 at 2:00 PM”

OK, that can be taken two ways. Are the trespassers trying to kill your cows for food, or are you shooting the trespassers for food? (Or both?)

notropis on February 24, 2010 at 3:24 PM

Media shocked by “unexpected” record low in new home sales

How……unexpected…

Fighton03 on February 24, 2010 at 3:31 PM

I am unexpectedly shocked to find out how shockingly unexpected this unexpectedly is.

Dick Turpin on February 24, 2010 at 3:33 PM

And the politicians are unexpectedly not getting re-elected!

respectamerica on February 24, 2010 at 3:55 PM

Sales of newly built single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery.

You know, an unexpected decline can occur, or an unexpectedly good month, something outside of the trend.

But HTF do you get an “unexpected” record low?

Jaibones on February 24, 2010 at 3:57 PM

They need to stop saving jobs for their sock puppet economists. Hire some good ones that make short term forcasts that work.

Obama’s chief economist is

Rosie Scenario PhD

seven on February 24, 2010 at 3:59 PM

How can they blame the weather for a seasonally adjusted statistic? Isn’t that exactly what the adjustments are for?
Interesting that new homes, which should qualify for the tax break, and don’t have the long escrow of short sales or foreclosures, are hit this hard. Could it be that no one wants to buy a house when they aren’t sure their job will last or that their paycheck won’t be eaten up by tax increases and healthcare mandates?

spudmom on February 24, 2010 at 4:04 PM

BREAKING NEWS!

Media inexplicably shocked at the publics expectation of unexpected unexplained expectations of unexpected events.

percysunshine on February 24, 2010 at 4:18 PM

Today’s figure is the worst since they started keeping records in 1963.

Barry was very young in 1963 so we can’t blame this on him.

NoDonkey on February 24, 2010 at 4:25 PM

notropis on February 24, 2010 at 3:24 PM

I’ll eat the cows 1st-but I’m leaving all options on the table-younever know how bad it can get & we do have a rather short growing season up here.

You mean like getting spinners for the wheels?

highhopes on February 24, 2010 at 2:05 PM

LMAO! I’ll have to let my husband know about this option!
Course, I’m not sure how this’ll fix the plumbing problem-but it will look cool for our only visitor-the UPS guy.

Badger40 on February 24, 2010 at 4:49 PM

“Unexpected!”

“You keep using that word. I do not think it means what you think it means.”

Zumkopf on February 24, 2010 at 5:50 PM

You know…

If an employee of mine was continually “unexpectedly” surprised at the results of the task that I was paying him to keep on top of, then they would not have gainful employment for gross incompetence.

How is this different?

Seven Percent Solution on February 24, 2010 at 7:48 PM

When you have 20% real unemployment plus 20% underemployment, it shouldn’t take a genius to figure out that sales of expensive things are going to fall.

crosspatch on February 24, 2010 at 8:16 PM

We didn’t expect the bloody Spanish inquisition….

Fighton03 on February 24, 2010 at 11:02 PM

Quite simply, building costs are too high to match the home prices seen in the slumping resale market. Banks won’t appraise a newly constructed home for full value, so they can’t be financed. Thus builders won’t build.

The existing homes in inventory, PLUS the homes coming into the short sale and foreclosure market, PLUS all the homes not being foreclosed so the banks’ books won’t look so atrocious must be cleared out the market first. Give it two or three years, at least, unless a miracle occurs.

desertdweller on February 25, 2010 at 3:36 AM

New AP headlines just released “January house sales ‘UNEXPECTEDLY LOW”.

Let’s not forget the effect that “Larry The Appraisal Guy” plays in this. 1. New rules put in effect in July 2009. 2. “LTAG” only needs as a minimum a 5 weekend correspondence course and pay for a state license. “LTAG” apprises similar value using the only houses available, “distressed and short sells”. The Banks take “LTAG”’s word as final and for the most part ,only loan %80 of what “LTAG” says. This is not a free market system “LTAG” is determining the values. In what is called a “death spiral” which becomes self fulfilling, each month will become unexpectedly lower than the previous month.

jpcpt03 on February 24, 2010 at 3:05 PM

jpcpt03 on February 26, 2010 at 2:59 PM

Comment pages: 1 2