Real Estate Market

New home sales nothing to write home about

by Broderick Perkins

(04/26/2010) New-home sales rose 27 percent in March to an annual pace of 411,000 new home sales per year.

That was the largest percentage gain since April 1963 and highest annual pace since July of 2009, according to U.S. Department of Commerce data.

What's more, the number was much stronger than the 335,000 pace MarketWatch-surveyed economists expected.

The story played out above the fold on front pages, above the scroll on home pages and all around blogging town.

"U.S. home sales surge"

"Builders rally on bounce in new-home sales"

"Home sales are cookin'" (An Associated Press headline, believe it or not.)

The headlines blared.

"Yawn," the economy replied and rolled back over.

Economists' expectations were probably right on, because without the home buyer tax credit of up to $8,000 and mortgage interest rates' five quarter run on the 5 percent mark, the annual housing sales pace would still be stuck in the middle 300,000s.

Ironically, that's today's going price range for many of those half-million dollar boom-time homes.

Unemployment has surged. Joblessness is cookin'.

Calling the increase to a paltry 411,000 homes sold annually a "surge" is lacing data with morphine -- but not enough to kill the pain.

New home sales were more than 300 times higher at the peak of the market then they are now. Three hundred times. Since the peak, new home sales have crashed 68 percent -- nearly 70 percent of the new home market -- gone.

From December 2001 to December 2004 the annual sales pace hovered around 1 million or more homes and in 2005 the annual sales pace peaked at about 1.28 million, before taking a nose dive, according to new and existing home sales data compiled by the National Association of Home Builders.

From March of 2009 to March of 2010, the annual sales pace of new homes, reported each month, has broken the 400,000 barrier only four times.

For all of 2008, the new home sales pace averaged 485,000 and then tanked at 374,000 in 2009.

The larger 5 million-a-year resale market fell half as far. From 2005 (7 million) to 2009 (5 million), the resale sales market has been slashed by about 27 percent, nearly a third, according to the same data.

That's the real story about home sales.

Slashed and burned.

We aren't in Kansas anymore.

It's the land of Catch-22.

Easy mortgage money has gone the way of skyrocketing home sales as the financiers of the greatest recession since the Great Depression cower and ration credit to protect their assets.

You can't buy a home in an economy that's had its legs cut out from under it by the housing market. If the housing market can't get on its feet, well, the economy won't have a leg to stand on.

Even if you have a job and good credit it doesn't mean diddily if the lender had a bad day on Wall Street -- or a good day.

Here's your surge.

 

 

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