US housing crisis – more evidence

The October US new house sales statistics were revised after official release from 735k to 727k, and the September ones from 770k to 716k. Those are big differences, and signs that all is not well in housing land.

So via the WSJ blog, a few tasty tidbits about the stats:

It isn’t just the bottom end:

The median price reported for October is 8.6% lower than the September median and 13% below the year ago level. This is especially remarkable, since the collapse of the subprime segment of the housing market should skew the median price upward. (Subprime buyers are disproportionately at the low end of the market. If they can’t buy homes, then the median home sold should be a more highly priced house.)

–Dean Baker, Center for Economic and Policy Research

Some think the bottom is close…

..the revisions seem to have been unusually large for the past few months… The pace of new home sales is now close to where it was in the late-1990’s – before mortgage credit standards were lowered and before speculators jumped in with both feet. Thus, we are probably getting close to a bottom in sales. However, prices may need to come down a bit further in order to achieve the type of affordability levels that would be consistent with a sustainable equilibrium. –Morgan Stanley Research

but meanwhile cancellations are high and rising.

These revisions reflect sales cancellations that builders now acknowledge have been unusually high — and growing.

David Resler, Nomura Securities 


Published by Lance Wiggs