The pace of seasonally adjusted existing-home sales in the U.S. fell 3.8 percent from a downwardly revised 5.00 million in April to a 4.81 million pace in May, down 15.3 percent on a year-over-year basis. Keep in mind that an expiring home buyer tax credit likely pulled contracts, but not necessarily closings, forward last May.
The median sale price for existing-homes in May was down 4.6 percent year-over-year to $166,500 as distressed sales accounted for 31 percent of sales volume, down six points from April and even year-over-year. Total housing inventory at the end of May fell 1.0 percent to 3.72 million, a 9.3 month supply, up from 9.2 months in April.
Existing-home sales in the west were unchanged from April to May, down 10.0 percent on a year-over-year basis on a median sales price that’s 12.6 percent lower.
∙ Existing U.S. Home Sales Pace Down 12.9% Year-Over-Year In April [SocketSite]
∙ Existing-Home Sales Decline in May [realtor.org]
∙ Homebuyer Tax Credit Extension For Closing (Not Contract) Date [SocketSite]
What was that talk about a “resilient market”?
Those words were pretty measured, and they appeared along with posts pointing out how the other months this spring looked YoY, and why May YoY behaved the way it did.
I think it’s very difficult at this point to not recognize that housing is going double-dip. As the most recent CS numbers point out, housing has now declined more than it did during the great depression. With coming restrictions on jumbo loans, this does not point anywhere but down for SF.
I can understand motivations to buy, but unless one is getting a very, very steep discount, it seems to make very little financial sense.
Up until the Great Depression, self-amortizing loans were nonexistent, and most people put much more money up as a down payment than 20 percent. Of course, the home mortgage-related “financial innovations” of the last ten years or so: no-doc loans/stated income loans, negative amortization loans, 80/20 loans to facilitate no money down purchases, option ARMs, etc. weren’t available at all, and hence houses have been bid up because of an increased ability to pay. And of course this is all undergirding the layer of bubbliciousness created by loan repackaging and securitization.
So it is not surprising at all that housing has now declined more than it did during the great depression, the question now is whether the deflation will carry on for as long as it did during the Japanese Lost Decade.
When you consider the effects of the market distortions, the numbers are not all that bad.
We have so many different entities trying to “manage” our economy (The Fed, the Chinese, OPEC) that some small fluctuation like this isn’t particularly material or meaningful.
The economy is slowing down. It has been for several months. I don’t have any businesses related to architectural services or even commercial real estate, but the architectural billings index has been a pretty good indicator of my own businesses. The last half of 2010 looked pretty good. Now, it’s looking fairly bad. Not 2009 bad, but pretty bad nonetheless.
Greater than 50 indicates expansion: http://cr4re.com/charts/charts.html?CRE#category=CRE&chart=ABIMay2011.jpg
Financial services is a catastrophe. Tech businesses are mostly struggling, with the exception of a few headline grabber companies. We had some tech businesses that looked like they were going to increase their business with us in March or so as people gained more confidence. They all pulled 100% of it off the table in the last few weeks. Not just the increase, all of it.
The majority of businesses are slowing down again. About 5% of my customers have stopped paying their bills again. When that happens, it becomes self fulfilling because I have to pull back too. I think a lost decade would be a gift at this point.