New home sales fell by nearly one-third last month versus April with the end to the Federal government's $8,000 home-buyer tax credit. New home sales at 300,000 followed a downwardly revised 446,000 during April.
It was a record low for the series which dates back to 1963. The latest level was well short of Consensus expectations for 420,000 sales.
Can't pay your mortgage? Don't worry the state will pay it for you!:
Michigan’s plan to spend $154.5 million in federal funds to help those hardest hit by the economy has gained federal approval and will be available starting July 12.
The funds – targeted at helping borrowers facing pay cuts or job losses keep their homes – are expected to aid more than 17,000 Michigan households.
Until then, Michigan State Housing Development Authority officials will educate banks and credit unions about the process of evaluating borrowers for the program. Borrowers must apply with their lenders to take advantage of the lifeline, which will be awarded on a first-come, first-serve basis.
Has the world gone mad????? How on earth is this going to be productive? Will these borrowers all of a sudden be able to afford their house 12 months from now? Talk about a total waste of money.
We have already seen a 50-70% re-default rate on modified mortgages. Why on earth do they think this is going to solve the problem?
The government needs to be face the music: Millions of people bought houses they could not afford using lending products that are no longer available.
Pissing away billions trying to keep them in these homes is nothing but a total waste of money that we don't have!
I understand that the housing tax credit may have skewed this number a tad but let's put this into perspective. In 2007 (after the housing bubble had peaked) we still sold 769,000 new units according to Haver. Yesterday's number was more than 50% lower.
The median home price also dropped to $200,900 which is the lowest number since 2003. Think about this one for a second: Prices are collapsing at a time where we are seeing the lowest mortgage rates in history!
What this tells you is that America has lost interest in owning a home. The psychological damage has been done. As prices continue to fall, potential home buyers stay on the sidelines because they are petrified that they might lose money on their home.
Homes are now looked at as a place to live versus an investment. Once this mindset sets in it's very difficult to change it. What we are seeing now is a classic example of how deflation sets in on a specific asset. The more prices drop the more people stay on the sidelines which then triggers more price drops.
It's called a negative feedback loop (otherwise known as a deflationary death spiral). This is how bubbles pop and we are seeing it now in housing.
One more question to ponder: Can you imagine what the home sales numbers will look like when rates start moving higher and/or when the weather starts to get cold? Yikes!
I will leave you with this one piece of advice: Stay on the sidelines if you are looking to buy a house because this housing unwind hasn't even gotten into full gear yet.
Friday, June 25, 2010
Friday, June 18, 2010
U.S. home building craters after tax break expires
Single-family permits drop 10% to lowest in a year
Housing starts fell 10% to a seasonally adjusted annual rate of 593,000 in May, the lowest level since December. The details were even worse, as starts of single-family homes plunged 17% to a seasonally adjusted rate of 468,000, the lowest in a year.
It was the largest percentage decline in single-family starts since 1991.
Housing starts were up 7.8% compared with May 2009, but are down more than 70% from the peak. Read the full report on the Census Bureau's website.
The tax credit and low mortgage rates have helped revive home sales and construction from the worst downturn since World War II. But with the credit expiring, builders face tough competition from foreclosures of existing homes, and buyers remain cautious about the job market. In some areas, prices are still falling.
Most economists expect the weakness to persist for the next several months. "The tax credit pulled housing transactions and construction activity forward into the spring from the summer, so the next few months will see activity remaining at a very low level," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics.
Building permits fell sharply in May for the second straight month, with total authorizations falling 5.9% to a 574,000 annual pace after falling 10% in April. Single-family permits fell 10% for the second month in a row to a 438,000 pace.
Permits for single-family homes -- considered by many analysts to be the best gauge of the health of the building market -- stood at the lowest level in a year.
Permits and starts had risen smartly earlier in the year, as builders rushed to meet the deadline for the federal home buyers' subsidy. To qualify for the credit, buyers had to sign a sales contract by April 30 and close the sale by June 30.
It would be rare to start construction in May and complete it by June 30.
Housing starts fell 10% to a seasonally adjusted annual rate of 593,000 in May, the lowest level since December. The details were even worse, as starts of single-family homes plunged 17% to a seasonally adjusted rate of 468,000, the lowest in a year.
It was the largest percentage decline in single-family starts since 1991.
Housing starts were up 7.8% compared with May 2009, but are down more than 70% from the peak. Read the full report on the Census Bureau's website.
The tax credit and low mortgage rates have helped revive home sales and construction from the worst downturn since World War II. But with the credit expiring, builders face tough competition from foreclosures of existing homes, and buyers remain cautious about the job market. In some areas, prices are still falling.
Most economists expect the weakness to persist for the next several months. "The tax credit pulled housing transactions and construction activity forward into the spring from the summer, so the next few months will see activity remaining at a very low level," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics.
Building permits fell sharply in May for the second straight month, with total authorizations falling 5.9% to a 574,000 annual pace after falling 10% in April. Single-family permits fell 10% for the second month in a row to a 438,000 pace.
Permits for single-family homes -- considered by many analysts to be the best gauge of the health of the building market -- stood at the lowest level in a year.
Permits and starts had risen smartly earlier in the year, as builders rushed to meet the deadline for the federal home buyers' subsidy. To qualify for the credit, buyers had to sign a sales contract by April 30 and close the sale by June 30.
It would be rare to start construction in May and complete it by June 30.
Subscribe to:
Posts (Atom)
