Home Sales Still Fishing for the Bottom
I guess Obama can spin it as not only a jobless recovery, but a homeless recovery as well! Yeah, that’s the ticket!
High cancellations depress homes sales
By Lucia Mutikani
WASHINGTON (Reuters) – Sales of previously owned homes hit a seven-month low in June as demand for condominiums fell and contract cancellations surged, dampening hopes the distressed housing market was starting to improve.
The National Association of Realtors said on Wednesday sales fell 0.8 percent last month from May to an annual rate of 4.77 million units, the lowest since November, and declining for a third straight month.
Economists had expected sales to rise to a 4.90 million-unit pace.
Yeah, these are probably the same economists who thought it a good idea to steal $787 billion from taxpayers and then redistribute the wealth…
The drop in sales was surprising given that pending home sales contracts rebounded in May, and it eroded optimism over the sector that had been lifted by a report on Tuesday showing a jump in home construction to a six-month high in June.
Cancellation of contracts was the chief driver behind the drop in June sales, the Realtors said, but it could not give a specific reason. However, the group noted the sluggish economy, especially the weak labor market and tight lending conditions.
“Buyers and sellers are increasingly running up against conservative appraisals, which often cause deals to fall through or be delayed,” said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Government data next week is expected to confirm the economy lost further ground in the second quarter after a pedestrian 1.9 percent annual growth pace in the January-March period.
Canceled contracts rose to a 16 percent rate from 4 percent in May. This was the highest since the Realtors group started tracking cancellations last year and was well above the usual rate of 9 percent to 10 percent.
The decline in sales last month was concentrated in condominiums, with single-family home sales flat. Single-family homes account for a large portion of the home resale market.
PURCHASE MORTGAGE APPLICATIONS DIP
Data on mortgage applications offered little hope that sales would rise much in the months ahead.
Demand for home purchase loans dipped last week, the Mortgage Bankers Association said in a separate report, but low mortgage rates boosted applications for refinancing.
I think Cary Leahey (Economist for Decision Economics, NY) is fairly representative of the “ho-hum” attitude amongst investors:
“It’s like a broken record. The good news is bad news. It’s steady and it’s been steady for five months. But the pace is running well below historical averages. It’s disappointing. But the market knows that the housing recovery is going to be extremely slow and they’re fixated on the sovereign debt issues. So it won’t generate much interest.”
Of course, Paul Dales (Senior U.S. Economist, Toronto, Canada) seems to get the big picture and is brutally honest about it:
“It’s a disappointment. What has happened in recent months is housing activity appears to be depressed by unusually bad weather in April and May, which prevents people from going to look at homes and buy them. We were hoping we would get a bounce back but that hasn’t appeared to happen, which is a concern.
“People may be put off by economic conditions and outlook. The recent slowdown in the economy might be having a more marked impact on the housing demand and that is a concern for the future.
“DNR has stated that the cancellation rate of contract signings rose from 4 percent to 16 percent. That is very unusual. Normally when a contract is signed, the house is sold. Something has happened that has led to more cancellations. It may be jitters from the recent economic conditions or because banks may have tightened lending conditions, meaning that the financing a buyer hoped to get was no longer available. We don’t know for sure but something seems to have rocked the boat a little bit.”Explore posts in the same categories: Economics, Economy, Obama Sucks