As the NY Times informed us, earlier this morning,
stock markets "braced" for a bad July residential housing sales report. Over the past hour, what we've just learned via the National Association of Realtors (via Calculated Risk) is that: "
Existing Home Sales lowest since 1996, 12.5 months of supply."
[Diarist's Note: While most of the MSM will attempt to manipulate this story into something that it is not--and, quite frankly, to preempt the misdirected b.s. that'll ensue over it--for the record, I'm sticking with the headline of this post, because it happens to be a legitimate question. (Remember, despite massive attempts by our government to support the housing market over the past couple of years, mortgage rates are already hovering at near-record lows as you read this.)]
Big h/t to Calculated Risk!
-- SALES: existing home sales were 27.2% lower in July than they were in June; and 25.5% lower than July 2009
CHART: Existing Homes Sales (SAAR)
--INVENTORY: existing homes for sale jumped to 3.98 million in July from 3.89 million in June (as Calculated Risk points out, this morning the all-time record high was 4.58 million homes for sale in July '08)
CHART: Existing Home Inventory
-- MONTHS OF SUPPLY: months of supply skyrocketed to 12.5 months in July from 8.9 months in June.
CHART: Existing Homes: Months of Supply
As Calculated Risk also notes...
Existing Home Sales lowest since 1996, 12.5 months of supply
by CalculatedRisk on 8/24/2010 10:00:00 AM
Months of supply increased to 12.5 months in July from 8.9 months in June. A normal market has under 6 months of supply, so this is extremely high and suggests prices, as measured by the repeat sales indexes like Case-Shiller and CoreLogic, will start declining.
So, for all intents and purposes and despite a truly feeble attempt by the National Association of Realtors to spin this otherwise (even Calculated Risk is telling us to ignore their spin, now), the market for existing homes in this country does appear to be set to significantly decline in coming months, again.
Inevitably, those attempting to paint a rosy picture of what has just been announced will downplay these realities as the MSM runs with this, today; but here's what the normally-optimistic Calculated Risk is pointing out: "Ignore the median price! Double digit supply and lowest sales rate since 1996 are the key stories."
And, here's the earlier-in-the-day "expectations game" story from the New York Times: "Wall Street Stumbles Ahead of Housing Report."
Wall Street Stumbles Ahead of Housing Report
By CHRISTINE HAUSER
New York Times
August 24, 2010
Shares in the United States fell sharply on Tuesday as investors awaited the latest indication on the state of the housing market.
The tone for Wall Street's retreat was set before the opening bell in the United States with markets in Asia and Europe also falling. Investors will get looks at several reports this week on housing, durable goods and economic output that are expected to reinforce the outlook that growth in the United States remains sluggish.
"Markets are braced for more bad news from the U.S. residential housing market over the next two days," said Nicholas Colas, the ConvergEx Group chief market strategist. "Fears of another leg down in real estate are certainly weighing on hopes for broad based economic recovery."
The latest report on existing homes, this one for July, is released later Tuesday. Analysts have forecast a 13.4 percent decline in home sales in July. Statistics on new-home sales will be released on Wednesday...
Obviously, with home sales declining more than 100% beyond what was expected by Wall Street this morning, the market's reaction should speak for itself.
The reality that today's breaking news verifies the over-arching story that Wall Street has been delaying the bloodletting of their still FUBAR'ed balance sheets (in this instance, due to sitting on [and/or obfuscating] massive real estate inventory in their futile attempt to forestall further declines in the U.S. residential housing market), means this is very bad economic news for the months ahead.