This morning, the Census Bureau reported New home sales are down again.
Diving a bit deeper into the report there is clear evidence of builder speculation just as home sales and prices weaken.
New Home Sales by Price
New Home Sales by Price – Percent Distribution
Price Discounts Coming Up
New Home Sales Details
- Seasonally adjusted, home builders are speculating on 284,000 homes without as sales contract.
- One year ago, builders had 241,000 homes in various stages of construction without a sales contract.
- Median sales prices fell 6.2% in the current period and is up only 0.4% from a year ago.
- Year-over-year new home sales are down 1.2%.
Amusing Headline
On August 15, CNBC’s Diana Olick reported Homebuilder Sentiment Soars on Strong Sales
- U.S. homebuilders bounced back from a recent funk, as current sales and sales expectations leaped forward.
- The National Association of Home Builders/Wells Fargo Housing Market Index now stands at 68. Anything above 50 is considered positive sentiment.
- Builders say they are seeing rising demand from buyers, who seem ready to pay a premium for new construction.
Home Builders In Trouble?
It might be a bit early to make that call, but in general, builders build until they go bust, turning most bullish at the top.
At a minimum, builders will have to offer steep discounts to unload inventory.
Mike “Mish” Shedlock
If the people purchase homes for speculation (profit) then sooner or later we get a bubble.
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The rah rah tactics of the real estate industry, and subsequent distortion of the facts, has been a commonplace since the 1970s…Then when the builders and their loan partners become insolvent, they will want help from the government(s)….
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I am surprised the RE industry avoided blamed for the financial crises. But then, who can deal with every aspect in only ten thousand pages of regulatory framework?
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Not only in housing are vendors bullish at the top of the market just before the cliff edge
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If you look at long term charts of housing starts/completions, they haven’t built hardly any new housing in this recovery compared to previous. New housing starts/completions are still where they were at the BOTTOM of prior recessions. Home inventory new & existing is very low pretty much everywhere. Millennials are also getting older and closer to home buying age. I do not see how builders get into trouble with such low housing supply everywhere. Lending is still very tight and conservative (both loans to buyers and construction loans for builders). I don’t see anywhere builders have overbuilt.
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Not in Seattle. Ka-Ching! http://seattlebubble.com/blog/2017/09/26/case-shiller-everybody-get-board-seattle-real-estate-rocket-ship/
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Seattle has gone up a lot. I don’t see any signs of what would cause a large price drop. Maybe a 2000 style dotcom crash? A big key is there is so little inventory on the market and nothing showing a trend of inventory growing.
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Seattle has been going up since the nineties, but only a little. Are you saying it’s gone to deep shite like it’s neighbour; Vancouver, Canada?
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Its been going up A LOT more then “a little” since 2012. It is the #1 city in the U.S. in year over year appreciation right now. And that is despite already having big price gains in 2013, 2014, 2015, 2016. Ten thousand people a month move to the Puget Sound region. Lots of foreign Chinese buyers here too. Could be next Vancouver. Rents have also shot through the roof since 2013. Can you say Amazon? Folks, we are now living in the “United States of GoogleAmazon”.
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Reblogged this on World4Justice : NOW! Lobby Forum..
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davecydell here from 2007: It is over again in housing sales. I lived thru it on the ole mish blog way back then. And I am still alive and kicking. Crash is already here, puppies.
[ancients may remember me as ChangeYourDogCanRollIn]
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Chicago real estate not well. I am seeing huge numbers of “price drops” “back on the market” and “reactivate listings”. Beyond seasonality. This probably won’t end well.
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Mish, slight clarification. Your stat for new home sales down 1.2% YoY….is for the month of August only. For the first eight months of 2017, new home sales are up 7.5% compared to the same period in 2016.
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