A few days ago, there was a negative 2.7% print for existing home sales for August. This caused stock index futures to drop some 12-13 points immediately.
The National Association of Realtors (NAR) said existing home sales fell 2.7% to an annual rate of 5.10 million units, from 5.24 million units in July. That compared to market expectations for a 5.35 million unit pace.
The Chief Housing Whore for the NAR, Lawrence Yun stated it was just temporary or a minor retreat. We will see. Is it not funny that the biggest lobbyists for extension of first time home buyer tax credits is the NAR? Is it not funny that that they are always in the ear of the Fed and its purchases of MBS in the open market?
The central bank has purchased $694 Billion of mortgage backed securities since January and plans to spend $556 Billion more by April 2010 to keep interest rates down. The debt buying is the biggest program in the Fed’s arsenal. These purchases were scheduled to stop at the end of December, but the FOMC decided on September 23 to continue the program through the first quarter of next year and slow the pace of buying to "promote a smooth transition in markets." They are basically telling you this program is ending. The training wheels are slowly coming off.
This debt buying spree pushed the average 30 year mortgage interest rate this week to 5.04 percent, its lowest since May. The debt is guaranteed by Freddie Mac, Fannie Mae, and Ginnie Mae. Plus some 80% of all new mortgages are being guaranteed by the FHA. This figure was only 20% at the height of the boom years. All in all Government is the Housing Market. This can't continue, and thus housing is headed for another serious drop.
tradersutra.blogspot.com/2009/09/uncle-sam-is-housing-market.html
tradersutra.blogspot.com/2009/09/fha-bailout-next-on-tap.html
On top of yesterdays housing news, today's new home sales were also a disappointment. The
Commerce Department said sales rose 0.7% to a 429,000 annual pace, this was below market expectations of 440,000 units. The July figure was also revised downwards.
Other sober data points:
Compared to August last year, total new homes sales fell 3.4%
The median home sales price in August fell percent 11.7% from a year earlier to $195,200, the lowest since October 2003. In July, the median home price was $215,600.
Although inventory was down, it doesn't take into account the massive shadow inventory that is on banks balance sheets nor does it take into account current foreclosure activity. Many banks are not even foreclosing on home owners because they cant keep up with the pace in many areas. Some are still allowed to stay in their homes up to 12 months of not making one payment.
The markets are clearly at inflection point.
The dreaded month of October is upon us.
No comments:
Post a Comment