We’re finally seeing some progress on the economy … at least in the media reporting, anyway. For the second straight day, a wire service has managed to eschew the word “unexpectedly” when reporting bad news, this time on new home sales in February. Mirroring yesterday’s report on existing home sales, the new-home market dropped for the fourth straight month (via Guy Benson):
Sales of newly built U.S. single-family homes fell for a fourth straight month to a record low in February, a government report showed on Wednesday, heightening fears of renewed weakness in the housing market.
The Commerce Department said sales fell 2.2 percent to a 308,000 unit annual rate from an upwardly revised 315,000 units in January.
That’s not to say that Reuters doesn’t imply the “unexpected” term in its report:
Analysts polled by Reuters had expected new home sales to edge up to a 320,000 unit annual pace from January’s previously reported 309,000 units.
Those same analysts have been wrong every single month in this stretch. Perhaps Reuters should employ better analysts. How many months in a row of getting it wrong will it take for Reuters to find people who guess correctly?
The news wasn’t all bad. Prices rose from January 6.1%, the highest increase in several months. Unfortunately, that is hardly enough to recuperate the losses in home values over the last couple of years. Even that news is tempered by the increase in new-home inventory, up 1.3% while sales fell 2.2%. The inventory backlog will now take over 9 months to unload at the current sales rate, which means that stressed investors will probably have to cut prices to get income flowing again.
Reuters also noticed, as wire services did yesterday, that the extensions of the tax credit hasn’t had any impact on housing sales. I warned last year that the temporary tax credits had little impact but to steal sales from the next several quarters, since the credit on its own didn’t create a large class of suddenly-qualified buyers. It simply incentivized those who would have bought in the nearer term to speed up their purchases, much as the Cash for Clunkers program did for car buyers. The effect of these policies were easily predicted by everyone outside of the circle of analysts employed by Reuters, or by the White House.
Update: Bloomberg still likes the term “unexpectedly.”