Matrix Blog

The New York Fed just put out an economic recap of the U.S. economy that is chock full of charts and data.

NYC employment growth is strong…

But nationally, unemployment is falling but those being counted on the roles are falling…

Housing starts have ramped up but most is multi-family – driven by freakin’ high rents.

New single family home sales are lagging existing home sales (see chart above)…

And we wonder why the economy doesn’t feels so good…anemic wage growth…

Tags: Existing Home Sales, New Home Sales, Housing Starts, Employment, fundamentals, Unemployment, Average Hourly Earnings

Comments Off on Fed Charts: How are the Housing Fundamentals Doing?

Read my latest Bloomberg View column Housing’s New Wealth Effect. Please join the conversation over at Bloomberg View. Here’s an excerpt…

It was a busy week for housing market reports. The U.S. Census published its new home-sales results for August, showing an 18 percent gain from the prior month and a 33 percent increase from August 2013. News headlines relied on words such as “surged” and “soared” to describe the results.

Only a few days earlier, the National Association of Realtors released its existing home-sales report for August, which showed month-over-month sales falling for the first time in four months. The inventory of unsold properties was 4.5 percent higher than a year earlier. I recently addressed the market slowdown in “Understanding Housing’s Dog Days.”

[read more]

My Bloomberg View Column Directory

My Bloomberg View RSS feed.

Tags: Existing Home Sales, Inventory, New Home Sales, Absorption, Wealth Effect, U.S. Census, NAR, National Association of Realtors

1 Comment

The comparison of housing market statistics against last year’s results produced misdirection in our understanding of it’s current state. Although a year-over-year comparison gets rid of seasonality, the results are at the mercy of how normal the prior year was…

The slowdown in the U.S. housing market has caused much hand-wringing. But keep this in mind: robust housing sales and price gains in 2013 were the anomaly and at odds with tepid economic fundamentals such as income, employment and credit. It’s the year-over-year comparisons that make things look worse than they are.

Read my latest Bloomberg View column
Understanding Housing’s Dog Days.
Please join the conversation over at Bloomberg View.

My Bloomberg View Column Directory

My Bloomberg View RSS feed.

Tags: Existing Home Sales, Listing Inventory, Pending Home Sale Index, median sales price, S&P/Case-Shiller Home Price Indices, NAR, National Association of Realtors

Comments Off on Bloomberg View Column: Understanding Housing’s Dog Days

[click to expand]

I’ll let this soak in.

New development sales are significantly detached from the balance of the market. I selected average sales price to exaggerate the trend to make my point.

Tags: Existing Home Sales, New Development Sales

Comments Off on Rocket Ship: Manhattan New versus Existing Average Sales Price

[click to expand]

I always like to parse out press release of the NAR Existing Home Sales Report using their data but presented it with proper emphasis. I believe these charts are better ways to interpret the report results.

My two big rules: ignore seasonal adjustments and focus on year-over-year results. The consumer doesn’t know that the EHS report results are heavily adjusted rather than providing the actual results.

Since the annual sales figure is a multiplier of a monthly figure, why do we need to alter the actual numbers any more by adjusting for seasonality? Through recent periods like the possible expiration of the Bush tax cuts (end of 2010), the federal homeowners tax credit for new buyers and existing home buyers as well as the expiration of the fiscal cliff at the end of 2012, seasonal adjustments are subject to maddening skew.

For much of 2013, median sales price was rising at an annual rate of more than 10%…

• It’s good to see the pace of the market returning to more sustainable conditions – last year’s market was not normal with rapid price growth and tight supply.
• Now we are seeing inventory return to the market and rate of price growth is easing. Both are good news.
• Mortgage rates have slipped but still not to the lows of early 2013. Falling rates not helping sales rise because last year was a release of years of pent-up demand.
• First time buyers are still not as active as they need to be, with their share down to 27% from 29%. Typically they shold account for at least 1/3 of the market. Tight credit and tough job market are reasons (not a lifestyle changes).

[click to expand]

Tags: Existing Home Sales, EHS, NAR, National Association of Realtors

Comments Off on NAR May 2014 Existing Home Sales: ‘Heat-up’

The National Association of Real Estate Editors just held their annual conference and one of the experts was Lawrence Yun, the chief economist of the National Association of Realtors.

Admittedly he has always seen the real estate world through different lenses than I so I am often thrown for a loop when I come across some of the rationale for the current state of the housing market.

A local media outlet recapped his NAREE speech but since I didn’t attend and there is no transcript, I’ll go with the following paraphrasing:

Mortgage rates reached record lows in 2012 and 2013 of around 3.3 percent for 30-year home loans. Homeowners don’t want to let go of those once-in-a-lifetime bargain mortgages, says Lawrence Yun, chief economist for the National Association of Realtors. So homeowners avoid putting their homes on the market in order to keep those low mortgage rates and that has resulted in super low inventories of home for sale. Although rates are still low (less than 5 percent) many people are opting to rent out their houses so they can hang onto great mortgages, Yun says.

Here’s another way to look at what he says is happening:

Yun – Home sales are not rising (year-over-year) because mortgage rates are so low that would-be sellers won’t sell. They simply love their low mortgage rate more than moving.

My view – Home sales are not rising (year-over-year) because of a combination of rapidly rising home prices that reduces affordability and historically tight mortgage lending standards that resulted record low inventory. Tight credit keeps the roughly 40% of home owners with low or negative equity from selling because they don’t qualify for the next mortgage. Hence, sales fall.

There is clearly way too much emphasis on mortgage rates in our housing economy.

Tags: Existing Home Sales, Lawrence Yun, EHS, NAREE, mortgage interest rates, NAR, National Association of Realtors

Comments Off on New Angle: Blame Low Mortgage Rates

[Source: NAR, click to expand]

Last week we were given another dose of housing news – housing sales didn’t go negative for the first time in four months (m-o-m) as inventory continued to expand and prices kept rising. Even though mortgage rates are down to what they were shortly after the rate spike last spring, it’s not stimulating much of an increase in sales activity (translation: no correlation between housing prices and mortgage rates). I still refer to Nick Timiraos’ epic post of charts last month. Lower sales will continue to expand inventory and take the edge off of price growth.

Looking back over 2013 – the housing market wasn’t “recovering” – prices were rising from the perfect storm of tight credit, sentiment that things were getting better, surviving the fiscal cliff and threat of rising mortgage rates. The market was rebounding off a low point that had nothing to do with fundamentals. I still think we will see some improvement over the next several years but it will be nominal until the economy shows real improvement i.e. jobs, income and credit.

Removing all seasonal adjustments, here’s what the key NAR US Existing Home Sale metrics look like to me:

UPDATE Here’s a wonky explanation from the Federal Reserve Bank of San Francisco of the existing sale slow down in their Economic Letter.

Tags: Existing Home Sales, NAR, National Association of Realtors

Comments Off on Thank Goodness The Pace of US Home Price Growth Will Cool

Michelle Conlin of Reuters gives a nice overview of the state of the US housing on PBS, talking through the national reports that hit us recently. Check it out. This month’s weak NAR Existing Home Sales report has unleashed a surge of housing self-loathing (although today’s PHSI seems to take some of the drama/edge off).

Tags: Existing Home Sales, Pending Home Sale Index, PBS, Reuters, PHSI, Michelle Conlin, EHS, Newshour, National Association of Realtors

Comments Off on PBS Newshour – Making Sense of Weak US Housing Reports

After separating new development data from existing sales from our 1Q14 Manhattan sales report, the high end new development product that is beginning to close now and pushing overall prices to record levels.

[click to expand]

Tags: Existing Home Sales, New Development Sales

Comments Off on [Chart] Separating New Development From Existing Sales Shows Sharply Higher Trend

NAR released their Existing Home Sales Report on Thursday with a headline that read: February Existing-Home Sales Remain Subdued that blamed the severe winter weather and low inventory for lower sales.

Of course inventory has been near historic lows for a few years so that’s not a new reason. I’m left with the weather and as someone who hates to use the weather as a crutch, it seems to be a pragmatic – it’s difficult to show or be in the mood to view properties when it is zero degrees outside. The weather explanation was also used in the prior report but those contracts were signed in December for the January report, before the “polar vortex.”

However the recent hand ringing caused by the downshift in sales is the concern that the recovery is cooling off.

I see the recent fretting about the cooling of housing as an indication of how improving conditions were based largely on Fed policy and not fundamentals. The combination of rising mortgage rates and declines from the year ago release of pent-up demand post-“fiscal cliff” likely gets price gains and sales levels in sync with fundamental economic conditions.

I’ve charted NAR EHS stats from the past 4 years without seasonal adjustments. Price gains have been insane so the combination of slowing sales and rising inventory will take the froth out of the market and hopefully get us on a more sustainable path.

Tags: Existing Home Sales, Inventory, Polar Vortex, median sales price, number of sales, Seasonal Adjustment, NAR, National Association of Realtors

1 Comment

Source: NAR

After slipping in June, NAR’s Existing Home Sales for July jumped 6.5% unexpectedly from the prior month. Last month the results showed an slight decline (and were adjusted downward for this release) and the thinking was that the market is starting to cool off with the introduction of rising rates to the market in May. The bulk of May contracts probably closed in July, the likely basis of this most recent release. However it looks like the market continued to see a rise in demand in June, following the May bump in rates as people looked to get in the market before rates rose further.

Still, this month over month stuff is pretty ridiculous to place a lot of faith in. The year over year surge of 20.7% (non-seasonally adjusted) and 17.2% jump (seasonally adjusted) is much more telling of the long term market change.

Here are a few other charts to review. Inventory is much lower than a year ago while showing some gains in excess of seasonal trends. Median sales price growth is off the hook. 13.7% YoY growth is not sustainable with flat income, tight credit and high unemployment and underemployment. Thanks goodness for rising rates.

Source: NAR


Source: NAR

Tags: Existing Home Sales, NAR, National Association of Realtors

Comments Off on NAR July 2013 US Existing Home Sales Unexpectedly Rise 6.5% M-O-M

Well, NAR released the August 2012 existing home sale numbers today. Yawn.

More importantly, it’s International Talk Like A Pirate Day and I’ve marked this day on my calendar for nearly as long as the 10-year run it’s had. Just mentioning the annual event to my kids makes them worry about me and yet be embarrassed for me at the the same time.

For more about this important holiday, you can get the story and go right to the founder’s web site.

And yes, home sales are up. [Pirate talk translator]

August Existing-Home Sales and Prices Rise [NAR]
On Talk Like A Pirate Day Jonathan Miller Tells It Like It Is [Curbed DC]
International Talk Like a Pirate Day [Wikipedia]
International Talk Like A Pirate Day [Original Site]
Google’s Pirate Themed Home Page [Google]

Tags: Existing Home Sales, Talk Like A Pirate Day, NAR, National Association of Realtors

2 Comments