Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

A Mixed Picture In The U.S. Housing Market

Housing-Market / US Housing Oct 23, 2009 - 02:08 PM GMT

By: Sy_Harding

Housing-Market

Best Financial Markets Analysis ArticleIn early 2007, after the real estate bubble began bursting and the extent of the problems from sub-prime mortgages became more clear, I predicted the aftermath would have the economy in the worst recession since 1973-74 by the end of the year (2007).


At the time, I also said the problems for the economy began in the housing industry and the recovery would also eventually begin in the housing industry.

Continuing to emphasize the importance of the housing industry, in predicting in February of this year that the stock market would launch into a substantial rally off its very oversold condition, I said the catalyst for the rally would probably be a temporary improvement in economic reports, including housing and retail sales. And that did happen.

Unfortunately, the improvement was indeed temporary. In the last month or two economic reports have turned sour again, with home sales and retail sales declining again (job losses and mortgage defaults rising, and consumer confidence falling).

It became clear that the temporary improvement in home and auto sales in the summer was due to the $8,000 government bonus to 1st time home-buyers, and the $4,500 ‘cash for clunkers’ deal for auto buyers.

The return of negative economic reports raised concerns about the sustainability of the economic recovery. So recently I have been saying that while the market was excitedly anticipating 3rd quarter earnings, I was more interested in seeing the next reports from the housing industry, due out this week.  

And we have now seen and can analyze those reports.

The first was the Housing Market Index, which measures the sentiment or confidence of home-builders. Their confidence had been picking up in the summer months, although very fractionally, as they experienced an improvement in ‘traffic’ and sales.

But Tuesday’s report showed the index has fallen again, from September’s already low 19, to 18 this month.

The following day’s report showed why builder confidence is falling again. It was reported Wednesday that new housing starts previously reported for August were revised downward, and starts in September were flat. Even more discouraging, building permits for future starts fell 1.2%.

Meanwhile, the Case-Shiller S&P Home Price Index report a couple of weeks ago was encouraging. It showed that home prices rose 1.6% in July, the 3rd straight month of price increases. Unfortunately, it was old data. We’re interested in what has happened to home prices since the temporarily improved conditions of the summer months.

What makes it compelling that we see later data on home prices is a startlingly gloomy forecast by famed banking analyst Meredith Whitney. Whitney says home prices, which have already declined 33% nationally from their peak in 2006, are set to begin falling again. And not by a small amount, but by another 25% from here.

Few real estate experts think the bottom is in for housing prices. But Whitney’s forecast is seen as too gloomy, even alarmist. Yet, credit-rating firm Moody’s expects a further decline of 10% from here. There are already more than enough people owing more on their mortgages than their homes are worth. So a resumption of price declines would certainly not be a positive for the economy.

The most encouraging of this week’s housing reports, was Friday’s report from the National Association of Realtors that ‘existing home’ sales shot up an unexpected 9.4% in September. That was especially good news since the NAR’s previous report was that existing home sales fell 2.7% in August, which ended four straight months of sales increases during the summer.

The stock market didn’t take any encouragement from the report however, possibly because it’s expected that when the NAR releases more information in a couple of weeks, it will show that roughly 40% of sales in September were to buyers scrambling to get in under the wire before the $8,000 bonus program for 1st time home-buyers expires. The concern is that sales will tumble again, as happened to auto sales once the ‘cash for clunkers’ program ended.

By the way, there are some disturbing reports regarding the 1st time buyer program.

I have heard from a number of 1st time buyers who closed on their homes a couple of months ago and expected to receive their $8,000 bonus immediately. But they have yet to receive it and are being told it will be another month or two before they do. And at a hearing on

Thursday the Treasury Department reported that the legitimacy of about 100,000 claims for the bonus is being questioned. That can be kind of scary for those who were assured by real estate agents that they qualify and cannot afford the home without the bonus to pay off credit cards or whatever.

Until next time.

Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily market blog at www.SyHardingblog.com.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules