New-Home Sales in U.S. Fall to Lowest in 13 Years

Discussion in 'Wall St. News' started by S2007S, Mar 26, 2008.

  1. S2007S


    I heard a few weeks ago someone mention a bottom was near around spring time, well the bottom is far from here, I say at least 4-5 years before you see housing prices start to move up again....2008, 2009 and 2010 are the years for hundreds of billions of ARMS to reset...

    More than $300 Billion in 2008 and 2009 and another $500 BILLION++ going into 2010.... Clost to $1 TRILLION worth, if you think the bottom of the housing market is near you are foolish, its very far away from finding a bottom.

    New-Home Sales in U.S. Fall to Lowest in 13 Years (Update1)

    By Courtney Schlisserman and Shobhana Chandra

    March 26 (Bloomberg) -- Sales of new homes in the U.S. fell to the lowest level in 13 years as tighter loan restrictions and the prospect of even lower prices kept buyers away.

    Sales dropped 1.8 percent to an annual pace of 590,000, the least since February 1995, the Commerce Department said today in Washington. January purchases were revised higher. The median price decreased 2.7 percent from a year earlier.

    The decline in sales, now in its third year, has caused builders to slash construction and is hurting other parts of the economy as consumers and businesses have a harder time getting credit. A separate report showed orders to factories for durable goods unexpectedly dropped in February, led by the biggest decline ever in demand for machinery.

    ``The direction is still down,'' Anirvan Banerji, director of research at the Economic Cycle Research Institute in New York, said in an interview with Bloomberg Television. ``We are now in a recession. We are unfortunately past the tipping point, and that means we have further to go in terms of housing downside''

    Stocks were lower and Treasuries held earlier gains after the report. The benchmark 10-year note yielded 3.46 percent as of 10:04 a.m. in New York, down 4 basis points from yesterday.

    Economists had forecast new-home sales would decline to an annual pace of 578,000, according to the median of 71 forecasts in a Bloomberg News survey. Estimates ranged from 560,000 to 600,000. Purchases in January were revised up to 601,000 from a previously estimated 588,000 pace.

    Durable Goods Orders

    Orders for durable goods, those made to last several years, fell 1.7 percent in February, led by the biggest slump ever in demand for machinery that indicates companies are becoming more reluctant to invest as the economy heads into a recession.

    Businesses are cutting back on equipment purchases as the biggest housing downturn in a quarter century hurts sales, and rising fuel costs erode profit.

    New home sales were down 30 percent from February 2007.

    Purchases declined in two of four regions, led by a 40 percent plunge in the Northeast. Sales improved in the South and West.

    Making Headway

    The report did contain one bit of positive news. The number of new homes for sale at the end of February dropped to 471,000, the fewest since July 2005, indicating builders are making headway in clearing out the inventory glut.

    Still, the decline in sales kept supply at 9.8 months, the same as in January and the highest since 1981.

    Elevated inventories are pushing down prices as builders struggle to unload homes they've already built. The median price fell to $244,100 last month from $250,800 in February 2007.

    Builders have been holding back starting new homes to try to limit inventories. Building permits fell to the lowest level in 16 years in February. Residential construction decreased at a 25 percent pace in the fourth quarter, the government reported last month.

    Federal Reserve policy makers last week said the economic outlook had worsened and the ``deepening of the housing contraction'' was one factor that was likely to hurt growth incoming months. On March 18, the central bank cut its main lending rate by three-quarters of a percentage point to 2.25 percent.

    Fed Action

    The Fed has cut its benchmark interest rate by three percentage points since September and enacted other measures to try to keep the economy afloat. On March 16, it reduced the rate on direct loans to banks and said it will provide up to $30 billion to JPMorgan Chase & Co. to help finance the purchase of Bear Stearns Cos. after a run on that securities dealer.

    Other government agencies are also stepping in. The Office of Federal Housing Oversight last week lowered the capital requirement on Fannie Mae and Freddie Mac, the two-biggest sources of mortgage money, to 20 percent from 30 percent. The initiative may immediately pump $200 billion into the mortgage market.

    Some reports indicate areas of the housing market have stopped declining for now. The National Association of Realtors said this week that sales of existing homes, which make up about 85 percent of the market, unexpectedly rose in February for the first time in seven months. The supply of existing homes for sale fell to 9.6 months, from 10.2 months in January.

    New home sales, which reflect contract signings, are considered a more timely gauge of the housing market than existing homes, which are calculated when a purchase closes a month or two later.

    Companies catering to the housing industry are suffering some of the biggest declines in demand. Sherwin-Williams Co., the largest U.S. paint retailer, reduced its first-quarter and full-year earnings forecasts yesterday because of falling domestic sales and surging raw-material costs.

    ``Domestic market conditions remain very challenging with no apparent end in sight,'' Chief Executive Officer Christopher M. Connor said on a conference call with analysts and investors.
  2. no one takes the NAR seriously. no one with any knowledge of the market anyway.