August New Home Sales: Lowest August Since 1982
Submitted by
CalculatedRisk on Thu, 09/25/2008 - 7:10am (97 comments)
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So when is the recession going to start?
Phone lines are hopping today. I barely got in after 4 tried.
Ignore the "deal close" headlines - keep calling!!!
Say NO!
(202) 224-3121
Bulldoze all the inventory and build one huge freaking Wal-Mart
I agree with EL Jefe. When's the NEBR going to make the official announcement already?
you are seeing real demand here.
this is what normal looks like.
take a good look too. once jobs start disappearing, so shall these sales.
The recession announcement is waiting for either:
a) bailout plan doesn't pass
b) Dem's win electio
Why not reduce interest rates near zero and lend freely to the banks if liquidity is the issue...
Reposting from prior thread.
VOTE THEM OUT.
ABC World News reported last night, "Under pressure of an October 1st deadline to pass a new budget, the House today followed what has become a tradition of late and punted. Instead of passing separate appropriations bills to fund each department of government as the Congress is supposed to do, the House instead passed a giant $630 billion omnibus spending bill which will fund the government for six months instead of the full fiscal year." Roll Call notes that the continuing resolution passed "without a single challenge to the thousands of earmarks worth billions of dollars, infuriating government watchdogs and fiscal hawks who thought changes made this Congress would stem the earmark tide." Roll Call adds that President Bush "had threatened to veto bills that didn't reduce earmarks by half but caved in negotiations with lawmakers." Taxpayers for Common Sense "counted 2,322 earmarks worth $6.6 billion."
I don't need a weatherman to tell me it's raining when I can just peak outside.
who cares about the NBER?
really.
And yet ... they have to keep building.
They have plots of land that themselves are falling in value, permits that eventually expire, construction loans to pay off. Damn the torpedoes, full speed ahead!
It's like watching a corporate version of the Donner Party in the mountains.
Hey Bush says we can avoid a recession if congress acts now!
If they sign the bill withing the next 30 minutes, they get 100 extra shares of Bear Stearns
Why not reduce interest rates near zero and lend freely to the banks if liquidity is the issue...
US Dollar would crash. But I don't think anything will prevent that now.
I'm just waiting for the Fed to run out of Bullets so they can stop shooting innocent bystanders
who cares about the NBER?
It will make the graphs look good. In today's economic environment, that's all we can hope for.
mp said the market was going lower
and all i got was what comes out of a
Breaking via Reuters -
halt lending
BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.
I usually just lurk here as I learn so much from this community - but this looks more symbolic, right ?? doesn't affect buying T-Bills, correct ?
And yet ... they have to keep building.
Lots of empty, half built houses...
Increasing amounts of homeless people...
Ironic isn't it?
Has everyone called congress today and opposed any and all bailouts? The vote is probably going to happen within 48 hrs.
CR, you still on for a mild recession?
clarice writes:
Breaking via Reuters -
That's false, it's old news and have been refuted.
Question to the experts. Wouldn't supply numbers be understated since as the market worsen, sellers take property off the listings?
Forecast - mild Depression
I can't believe the S&P is back over 1200 again.
Comrade Baron Von Helmut III writes:
"VOTE THEM OUT."
I wish we could, but as usual, most of the same bozos will be reelected. They are spending like drunken sailors on a bailout, so what's a few thousand earmarks worth not even $100 billion at this point?
I have voted against my senators and rep every time for the last umpteen elections, but they keep getting reelected.
What was that quote about democracies inevitably spending them selves into oblivion?
FRB: Commercial Paper Rates and Outstandings
Wow!!
Boockvar on CNBC is brilliant..see if you can get a video on it later.
Has someone mentioned this? it seems like a pretty important piece of the puzzle that is behind the scenes.
Credit Derivatives Market Shrinks 12%, First Decline (Update3) - Bloomberg.com
That's false, it's old news and have been refuted.
It's Reuters. Where has it been refuted?
JS writes:
I can't believe the S&P is back over 1200 again.
No worries. Just oily lowlife speculators.
This is a very weak report, but as grim as the news is for new home sales, I remain more pessimistic about existing home sales, and existing home prices, than new home sales.
IN our area, and no doubt in many others, spec home construction virtually disappeared this summer. Homes under construction are custom jobs with waiting buyers.
Homeowners trying to sell their current dwellings are finding that difficult--buyers are cautious, lenders are fussy.
White House meeting may make or break bailout plan - David Rogers and Amie Parnes - POLITICO.com
Negotiations over Treasurys $700 billion rescue plan for the financial markets have reached a make-or-break stage, with bipartisan meetings Thursday morning on Capitol Hill among top lawmakers and an afternoon get-together at the White House featuring the two presidential candidates, Sens. John McCain and Barack Obama.
President Bush, in a televised address to the nation Wednesday night, warned that action is needed quickly and invited in his two would-be successors. But the result is a highly charged, even dangerous political atmosphere that could jeopardize the progress already made by Treasury Secy. Henry Paulson and Federal Reserve Chairman Ben Bernanke.
House and Senate Democrats say they are near a deal on legislation, but its more among themselves at this point and faces uncertain support. At the same time, Bush has acted as almost McCains agent in setting up the White House meeting, which has been greeted with suspicion by the same committee chairmen the secretary needs to succeed.
Were trying to rescue the economy, not the McCain campaign, said House Financial Services Committee Chairman Barney Frank (D., Mass.),
....Our only hope! Campaign politics mucking this all up.
Man, looking at that Federal Reserve Release gives me shivers. Wow indeed anony.
CR, if you adjusted the new home sales numbers with population growth, would there be lower numbers in history at all?
One Salient Oversight writes:
That's false, it's old news and have been refuted.
It's Reuters. Where has it been refuted?
CNBC: China authorities denied this. go look it up.
PPT got new pumps distributed to them right after Bushie's speech. More PSI, more gals/sec.
Bush has us on the right track!
thanks all ! will check it out
From the Story Above:
Thats Ballgame Comrades writes:
"House and Senate Democrats say they are near a deal on legislation, but its more among themselves at this point and faces uncertain support."
This is our only hope.
Demand for housing beyond investor driven speculation is low and going lower. The SFR as an investment has created this large overhang in housing, nothing the Congress will do to slow that train down, so we should expect the RE market to reflect this inventory overbuilt the issue will be its length in years not months.
What i think is amazing is that we're comparing apples and oranges. 2008 to 1982 thats twenty years of added housing and population growth. (I'm not picking on CR's analysis we work with what we have)
But these numbers dont show how bad it is. And to think it could get worse...
scary...
....
I have a plan. Any Mexican that pays cash for a house not in foreclosure, gets immediate citizenship for himself and his immediate family. The plan shall be named the Lou Dobbs rescue plan.
Let's revist our predictions for new home sales. This data would indicate that I'll finish closer than CR for '08.
CR's picks:
2008: 515K
2009: 540K
Mine:
2008: 497,671
2009: 2,124,887 (Obama gives everyone who is behind on their subprime loan a brand new house with a unicorn tethered to a tree in the backyard.)
clarice writes:
thanks all ! will check it out
This however is true :
German Finance Minister Blames US for Financial Crisis
German Finance Minister Blames US for Financial Crisis | Germany | Deutsche Welle | 25.09.2008
German Finance Minister Peer Steinbrueck deemed the US banking crisis an "earthquake" that will cost the US its role as a superpower of the world financial system. He stressed that German banks can cope with losses.
He reiterated Germany's refusal to set up its own bank bail-out scheme, saying the crisis was principally a US problem.
I believe this is the lowest new home sales ever compared to the population numbers. If you take 1991 or 1982, the population base was waaay lower.
This is the worst ever.
There will not be a deal before Saturday. McCain has injected political grandstanding into this the Dems won't allow the appearance that McCain helped. McCain's camp has put out that he won't appear at the debate w/o a deal. McCain will either have to reverse or the world will see a 90 minute Barack Obama infomercial
what was the population in 1982? How do the numbers now not dwarf those 26 years ago?
Wow. Dollar suddenly spiked.
Anonymous --
http://www.federalreserve.gov/releases/cp/
Whoa.
Ah. here's the reason.
China denies shunning foreign banks
| Reuters
China denies shunning foreign banks
Thu Sep 25, 2008 6:44am EDT
By Samuel Shen
NANNING, China (Reuters) - China's banking regulator sought to reassure jittery financial markets on Thursday, denying a report it had told local banks to stop lending to U.S. banks and stressing that foreign bank operations in China were healthy.
"The CBRC has never, through any channel, issued a statement or told domestic commercial banks not to lend to or borrow from U.S. financial institutions," the China Banking Regulatory Commission said in a statement on its website.
CBRC Vice Chairman Wang Zhaoxing told Reuters that a report in the South China Morning Post, which said the agency had told Chinese banks to stop lending to U.S. banks in the interbank market, was not correct...
Naked Capitalism has an even more alarming report, via Bloomberg, on efforts to prevent China and other Asian countries from having a "fire sale" of T-bills.
"Asia Needs Deal to Prevent Panic Selling of U.S. Debt" « naked capitalism
A few population stats:
2006\t300,009,716
2000\t281,421,906
1990\t248,709,873
1980\t226,542,199
Finn: and the number of houseHOLDS went up by even more than that because the number of inhabitants per house declined.
Why is no one protesting this with equal ferocity?
House approves $612 billion defense bill
Tucked in the back pages of the newspaper, no less.
Bu it's just as ruinous to our economic health as the Wall Street debacle - more so given how our extraordinary military spending has become institutionalized.
I just figured it out, being my namesake. Maybe this whole Dollars for Kleptocracy stuff is a head fake to get us to ignore these horrendous econ numbers? I'm starting to see alot company down here(housing sales, jobless, still waiting for the Dow to drop by)
I'm not qualified to offer financial advice, but I would seriously suggest that people invest in anything that is likely to go up in value when the Dollar drops. Gold, oil, Euro, Yen... etc
Called both senators and rep this morning and let them know that this bill bails out wall street and does nothing to prevent home prices from declining which is the root of the problem and will vote against any candidate who votes in favor of the bill. I also asked for my ponie.
I bet this stick save doesn't last a week. This is HP's last shell in his bazooka.
"efforts to prevent China and other Asian countries from having a "fire sale" of T-bills."
Isn't that backwards though? Seems like they would dump dollars ON the plan, since it puts the US's ability to repay in question.
How close to the bottom are we?
Home prices seems to have dropped a fair amount MoM from ca230k to ca220k USD, inventory is declining and is now back to 2004 levels in absolute terms.
How much lower can these sales and prices go?
Thanks for your insights.
Cheers, Raph
And do it now.
My congressman is still against.
Only those in the negotiatons may agree.
KEEP CALLING
NO BAILOUT
(202) 224-3121
This is absolutely no surprise and was an obvious implication of the mass oversupply built from 2001-2007. New home sales will be below 500k for at least a couple of years and probably longer.
Oh, good. SO now we must be at the bottom, right? Right??
Recent Finance issue nearly caused an insurance company to bankrupt.
Who fault? Shouldnt we take this opportunity to tune back the incorrect system, or we will wait till the next few generations to meet the similar issues again ..?
Should the top management bare responsibility....?
The top management of the ( not private company ) listed company salary should be tied a portion of it to the shares.... so when the shares price drop, it don't just penalize the investors, but those who don't take care of the company.....
They only talk about how bad the crsis will be, but they did not give regulation measures ..
Since the congress is discussing .. Shouldnt we concern about its individual congress members standpoint and their opposition candidates standpoint within their own states .
Should $700b be pump into the all industries of the economy instead?
The crsis is only contain within sub prime, so that is why they only stop short selling for finance stock.....
Sub primes will be solved as long as all people have jobs and salary to pay for the house loan.....So use 700B$ into economy instead of the banks.....
最近保险公司将近倒闭。。。。
是谁的错。。。。？ 不在这个时候扶正回来，难道要等到下几代在遇到同样的事吗？
高级管理层该不该付起责任？
上市公司的高级管理层工资是不是应该和上市公司的股票价值挂钩呢？
龙的传人应该没这么好骗吧！。。。。先学基本面分析法，才来学技术性分析法。。。。
如果认为有理的话，请支持与告知，让更多人戒乱玩股票，力量才会大。。。。。。还有拨个电回家报平安吧。
Remind Myself whenever I want to trade
Home prices have another 15-20 percent to go downward
The Conservative Norwegian prime minister during their banking crisis in the 1980-90s, Kåre Willoch, was interviewed about the banking crisis in the US:
"You've had a willingness to take risks without taking any social responsability. These days it's the annual results of banks that decide how rich the leaders will become, without taking into account the risk the leaders have led the banks into. When things unravel at one place, everything unravels.
Those who think they are conservative in USA have completely forgotten their old classics. Adam Smith was crystal clear that the markets must be under sharp supervision and regulation. When it comes to finance policies, it's dangerous to listen to economists hired by banks.
[I]t may well be that they manage to solve the credit crisis and the economic problems. But Americans have a giant problem connected to their allergy against taxes and the debt this gives the federal government. The big debt will lower confidence in American state debt, and we don't know how this will affect the world".
Oh, good. SO now we must be at the bottom, right? Right??
How long is a piece of string?
ew thread
For most practical purposes the Months of Supply is really much higher, because many of the 4-million-plus resale homes on the market are in fact speculator-bought new homes that have never been lived in.
Add those in, and Months of Supply of homes that are effectively "new" from a potential buyer's viewpoint may be more than 24.
I now expect that 2008 will be the peak of the inventory cycle (in terms of months of supply) and could be the bottom of the sales cycle for new home sales.
Sales are certain to will fall futher in 2009. Population pressures are easing and the local and regional banks that do a lot of the lending to developers will be cautious for years.
...As a moving salesman in OC, CA, I normally have about 18 appointments in a 2 week period...the past two weeks has had 4 appointments..
Slowest period in my 30 year career! Yikes!
Barbara Boxer (Ca-D) is voting for the Dodd bill...
"Any Mexican that pays cash for a house not in foreclosure, gets immediate citizenship for himself and his immediate family."
We not, he probably helped build the house.
FRB: Commercial Paper Rates and Outstandings
A2/P2 spread of 4.09
Armageddon, folks; 3 times the level of 81-83. Why so high? Because the "bailout" will make ST paper worse. You heard me, worse. Propping up long-term MBS will draw money from other markets - including short-term CP, requiring even higher yields. In addition, the bailout is large enough to raise questions about the US's and the Reserve's stability, making them less able to support short-term paper with auction windows.
We're going to spend 700 billion to worsen the recession/depression.
My body has not been cryogenically stored for all these years for nothing. Myself and my new comrade, the head of Ted Williams, will soon reappear.
Myself and my new comrade, the head of Ted Williams, will soon reappear.
LOL...This calls for a morning bongload.
What is the A2/P2 spread?
Faxed, Wrote and Called. Everyday. Keep it going.
The frightening part of the New Home Sales and Recessions graph isn't the cliff diving that has occurred, it's the soaring that happened between early 2003 and mid 2005. That's the real aberration. The downturn has just brought us down to a more typical level.
My sense is that we still have further down the cliff to go because of it's ridiculous heights. And the bottom will be much more of a U, perhaps even a stumpy L, than a V.
"What is the A2/P2 spread?"
It's a measure of willingness for the market to take the unsecured IOU's of corporations big enough to issue CP, but not prime borrows like GE.
I'm no genius but, charts I've seen show a consistent,(inflation adjusted), but minor uptick in home prices for the last 50 years until 2003. Based on that data we are only halfway there on re-setting home of prices. 50% more decline in order
Population pressures are easing
bahahahahahahahahah
The A2/P2 spread is the difference between what a highly rated (AA) company has to pay to borrow and what a medium-rated company (A2/P2) has to pay. It's an estimate of the expected differences in bankruptcy rates. 4% indicates the market expects about 4% of mid-rated companies to go BK in the next year.
The effect on the economy is much worse than that 4% would indicate because most BKs occur in companies too weak to even be A2/P2. That rate will be much higher than 4%.
Just called my senators and rep. Sen Lautenberg had a long hold time (he's up for re-election), Sen Menendez had a shorter hold time and my Rep had no hold time at all but the staffer said they're getting lots of calls.
Unfortunately, both Senators seem to favor a bill that "caps executive salary" and includes "oversight" but that's it. I asked they look at pricing mechanisms for purchasing assets. I'll most likely be voting anti-incumbent this cycle.
Remind Myself:
Thanks for that reminder not to play with volatile substances that we do not understand.
At our home we are now undergoing a merciless self-criticism. At least we're 90% liquid...
Employer health-plan costs grow 5%
Link: http://www.marketwatch.com/news/story/employer-health-care-cost-rise-5/story.aspx?guid={623F2BE9-6514-4127-AA83-18A7129D21A3}
"Workers' share of premiums, which they pay out of their paychecks, jumped 117% to an average $3,354 this year compared with nine years ago, when they were $1,543, the survey found. Their earnings grew 34% since 1999 while general inflation rose 29%."
Why should any young go-getter with college debt buy a home in a climate where healthcare and energy soar like this? Think twice young ones. I am now paying more for healthcare than for the fixed rate mortgage I took out 15 years ago.
Paulson talks about executive pay being the "bacon that a rabbi would hate to eat on Yom Kippur". This is a lie, the real bacon is not executive pay.
The real bacon is that toxic waste his former bank and others are choking on. To watch the choking just look at the economic numbers people are pointing out.
This does not mean a bailout is in order. It means that if the bailout passes, WE will be choking on it instead. I don't know what the banks should do, but it is not my problem and I will not accept it.
NO BAILOUT!
My morning routine has become make coffee, feed the critters, call my Rep and Senators...
The first two are more satisfying.
Beaver,
Many thanks for the info on the moving market. (You have my sympathies.) So nice to see a bit of concrete information amid the torrent of pure opinion.
Why should any young go-getter with college debt buy a home in a climate where healthcare and energy soar like this? Think twice young ones. I am now paying more for healthcare than for the fixed rate mortgage I took out 15 years ago.
sb
And look for a huge rise next year. I got stuck on a pricing committee this year (my speciality is CC, a high ticket item) for a 4 hospital health-system and the suits (I am a caregiver) want a 7% increase across the whole chargemaster. OY! Nurses are trying to fight it; we deal with pts and their families who even with insurance, are beginning to ask "how much will this cost?"
(202) 224-3121
"We're sorry, all circuits are busy right now, with very angry citizens - every single one against this awful Wall Street bailout plan"
--
"This is a very weak report, but as grim as the news is for new home sales, I remain more pessimistic about existing home sales, and existing home prices, than new home sales."
It is nice to hear the term pessimistic from you, CR. I sincerely hope that you will one day come clean on your Housing Demand estimates.
BTW, you will be lot more pessimistic about CRE and the economy next year. You are going thru a personal growth phase right now. Some of us are here to help you in any way we can. Sebastian is still a toddler.
Jas
Adjusted for population (per capita) or number of build homes this is probably the lowest sales volume (going back to the beginning of the series in 1963). Wow.
McGangsta: Ed McMahon to rap in viral videos
Ed McMahon has an unexpected new job title: rapper.
The 85-year-old former "Tonight Show" sidekick will star in two viral rap videos for FreeCreditReport.com, a financial Web site owned by credit bureau Experian. The videos feature McMahon wearing a tracksuit, being chauffeured around Los Angeles in a Cadillac Escalade golf cart and waxing lyrical about his very public financial troubles. "I knew I could sing the blues, but I didn't know I could rap," McMahon said Wednesday.
The videos will appear online in October. Charles Harris, FreeCreditReport.com's vice president of strategic marketing, said the company sought out McMahon to star in the humorous spots after seeing him openly discuss his finances on "Larry King Live." Harris said McMahon represents "a man who is taking charge." In the first video, McMahon _ who once pitched the American Family Publishing sweepstakes _ and a bodyguard are cruising through a neighborhood looking for sweepstakes winners to ask for some money back, but McMahon doesn't actually go through with it. In the second spot, McMahon dons a new suit after undergoing a financial and emotional makeover. "When I retired, I was famous," McMahon raps in the video. "I had money and glory/I bought a house for 6 mill/I thought nothing could touch me/Until my credit went south, and debt started to crunch me/Next thing I know, instead of playing gin rummy, I was scrambling just to make ends meet/It wasn't funny." After being joined by two scantily clad women, McMahon continues: "Got a bump from the media chumps, but that was temporary/Wife with bad credit was scary, so I got wise/I may have fallen, but I got back up/Now I'm back on the attack, like a ninja swinging nunchucks/I told the haters, 'Go on, take a hike'/It's my show now, and I can do what I like." McMahon said he spent one day in the studio recording the rap. He said he hopes his participation will inspire viewers to learn from his mistakes and become more aware about their finances.When asked if he would consider releasing a full-length rap album, McMahon said: "Not immediately."
German Finance Minister Peer Steinbrueck deemed the US banking crisis an "earthquake" that will cost the US its role as a superpower of the world financial system. He stressed that German banks can cope with losses.
He reiterated Germany's refusal to set up its own bank bail-out scheme, saying the crisis was principally a US problem.
And just where is ipodious?
Josiphos writes:
I'm just waiting for the Fed to run out of Bullets so they can stop shooting innocent bystanders
I nominate this for quote of the week.
When looking at the graphs, the seasonal variation seems to lessen over time. For example, 2008 is almost flat. CR; any idea why?
"He reiterated Germany's refusal to set up its own bank bail-out scheme, saying the crisis was principally a US problem."
Germany has officially jumped off the "enabler's list".
We should thank them.
Anybody know how to say "Not a penny of tribute for the pigmen" in German?