US home sales

[Americano]

Look very grim as the government keeps making financial institution preferred stockholders happy campers.

Nov. 24 (Bloomberg) -- Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.
Purchases of existing homes declined 3.1 percent last month to an annual rate (http://www.bloomberg.com/apps/quote?ticker=ETSLTOTL%3AIND) of 4.98 million units, less than forecast, the National Association of Realtors said today in Washington. The median price fell 11.3 percent to $183,300 from a year earlier, the largest year-over-year decrease since records started in 1968.
Mounting foreclosures are pushing down home prices (http://www.bloomberg.com/apps/quote?ticker=ETSLMP%3AIND) and adding to the inventory (http://www.bloomberg.com/apps/quote?ticker=ETSLHAFS%3AIND) of unsold houses. Sales may slump further as the worst credit crisis in seven decades makes banks reluctant to offer mortgages.
“Underlying demand appears very weak; it seems many sales are coming from cheap prices on foreclosed properties,” said Sal Guatieri (http://search.bloomberg.com/search?q=Sal+Guatieri&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), senior economist at BMO Capital Markets in Toronto, whose firm’s forecast of a 4.97 million sales pace was the closest in a Bloomberg survey of 67 economists. “Home sales will continue to fall over the next few months because of tightening credit conditions.”


more:

http://www.bloomberg.com/apps/news?pid=20601103&sid=aaVyYQi42_HA&refer=news


Citigroup's weekend bailout could reach $300B but there's been zero relief on the consumer side. I keep trying to understand how immense government capital injections to financial institutions will loosen credit for the consumer side which is 70% of GDP with stagnated wages and rising unemployment.

[Michael]

My favorite blogger (Duncan Black, aka Atrios) has commented on how the US Government keeps racing to throw billions at the "fake economy" that doesn't produce anything (financial services) and keeps ignoring the "real economy" that actually produces jobs and stuff (auto and housing sector).

[Americano]

My favorite blogger (Duncan Black, aka Atrios) has commented on how the US Government keeps racing to throw billions at the "fake economy" that doesn't produce anything (financial services) and keeps ignoring the "real economy" that actually produces jobs and stuff (auto and housing sector).

Administration friends and business allies have lots of preferred stock in financial services and heaven forbid the stipulated dividends should falter due to lack of cash flow. This is the new bubble with limited participation.

[Michael]

The most notable fact about the home sales figures is the fact that 50% of all house sales were on foreclosed properties.

The other interesting 'factoid' there is that prices of 'new homes' fell 11.3% while prices of 're-sell' homes fell only 3%.

I've been saying for a long time that 'new houses' are overpriced pieces of crap compared to existing older houses. It is interesting to see that the market is now catching up with this reality.

Another way of looking at that spread in percentage price drops is to figure that the 'new homes' market is heavily dependent upon 'speculators' who push the prices up with false demand. In the present market, these speculators have evaporated entirely. There are few speculators in the 'resale' house market and thus, only tiny price drop there.

I've seen reports that showed between 1/4 and 1/3 of ALL new house purchases in the last 2 years in the USA were speculators who had no intention of ever living in the house they bought - intending to flip the property within six months.