Analysts have been calling for a bottom in the housing market for 18 months...they still are! Despite historic lows in new home sales for February, terrible existing home sales as well, traders and analysts keep looking for the sunny side.
Just look at these comments:
Wells Fargo: "...we believe this data does not reflect the reality of the marketplace, although it is feasible that weather played a role in the seasonal adjustment factor."
KBW: "Given the high standard error of the Census estimates (particularly the smaller regions) and the distorting effects of annualizing such low volume levels, we would caution investors against reading much into this data."
JPMorgan: "...we are only modestly disappointed by this data point, based on three factors: weather, other more stable demand indicators, and this series' high degree of revision."
Deutsche Bank: "We think February new home sales should be mostly disregarded because like January's report (284K down 13% from December) it simply does not match most of the other new home demand datapoints we have seen."
The basic argument is the data is either distorted or just plain wrong. Other indicators (NAHB builder index, individual analyst channel checks), have not been as dire. Stay the course. The numbers will be revised upward.
(Read a second opinion: Why the US Housing Market Is Likely to 'Double Dip')
I'll repeat what I said in an earlier post: existing home sales are continuing to sell at a much bigger discount to new home sales than has historically been the case. In other words: buyers perceive more value in buying an existing home. This means more pressure to lower prices on new homes, and — as we have seen — lower building starts and permits.
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