Housing High Still Low
You would think that a 24 percent positive jump in any index, housing or otherwise, would have the analysts for that industry toasting recovery with bubbly champagne; not so much today.
The 24 percent jump in sales of new construction from May to June followed a 37 percent drop in sales of new construction from April to May (following the expiration of the home buyer tax credit.)
You could say that the two months kind of cancel each other out, slightly to the negative, but today's number, if nothing else, offers a big sigh of relief that while things aren't exactly getting better, they're not getting significantly worse.
And that seems to be the mantra of the market these days.
We're "stabilizing", but stabilizing at historically poor levels. Foreclosures, sales, prices...no more plummeting, but no improvement yet either.
Just listen to the experts:
Peter Boockvar, Miller Tabak: Bottom line, while the figure was better than expected, new home sales make up less than 10% of the overall industry with existing homes making up the balance. It's good to see a pick up in new home sales but an overall market that still has way to much inventory does not need too many new homes built.
Dan Oppenheim, Credit Suisse: The small sample size, especially given the lack of activity to survey recently, lends itself to extreme volatility in reported Census figures, and it’s hard to trust the data in months like these. Either way, the low level of activity (even with the reported increase) is well below desired absorption levels of builders and will lead to additional pressure on home prices.
Mark Hanson, Housing/Mortgage Analyst: In June, New Home Sales as a percentage of Existing Home Sales was also the lowest ever for any June on record and the second lowest in history — last month was the lowest ever. With New Home Sales at 5% of Existing Sales, some many think there is a lot of growth ahead But with demand being in distressed real estate and incredible growth expected through foreclosures & short sales over the near, mid and long term the builders have an uphill battle ahead.
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