Our Changing Globe

Archive for the ‘housing market’ Category

I couldn’t help but wonder if journalists were clutching at straws when I read stories today that said things similar to, “Orders for durable goods and home sales probably rose in April as the worst U.S. recession in at least half a century started to loosen its grip”.

What do they mean “probably rose”?

Surely, they did or they didn’t.

Sifting through the reports the good news was;

Orders for goods meant to last several years increased 0.4% making it the second gain in three months.

Combined sales of new and existing homes probably advanced to a 5.02 million annual rate from a 4.93 million pace in March, but again the reports say “probably”.

If true, and not “probable” then the above is good new but a stabilization in housing and manufacturing would help the present economic slump since they are the two areas suffering the biggest contractions. It won’t be possible to maintain these gains however unless banks loosen their purse strings, if unemployment continues to rise.

Surveys suggest that the sales of existing houses, which account for more than 90% of the market, rose 2% in April to a 4.66 million annual rate from a 4.57 million rate and Commerce Department figures are expected to show that new-home sales increased 1.1% to a 360,000 annual rate.

David Resler, who is the chief economist at Nomura Securities International Inc. in New York added to the “probables” and “expecteds” by saying “Evidence that the 16-month recession is coming to an end continues to build. Home sales and building activity seem to be stabilizing and manufacturing surveys point to smaller production cuts and smaller job losses”.

A spokesperson for Toll Brothers Inc., the largest U.S. builder of luxury homes, said last week, “That signs were beginning to emerge that the worst was over”, and “We believe the U.S. government’s forceful intervention in the capital markets has begun to restore some confidence that the financial system is on the road to stabilization”.

So the pundits are now telling us that the recovery is, “probable”, “expected” and “suggested”, and I hope that what they see is their glass balls is correct and that it will all happen soon, but I’d have liked to have seen more definitives.

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Just released Commerce Department figures indicate that U.S. housing starts dropped to a record low of 458,000 in April.

A 13% decline to an annual rate of 458,000 was led by a 46% decline in multi-family starts, compared to March when builders broke ground on 525,000 homes.

Building permits, which are a sign of future construction fell by 3.3% to a record low rate of 494,000 and taken together the two declines suggest that house prices have not yet reached rock-bottom.

So called experts had forecast an increase to a 520,000 annual pace from a 510,000 previously estimated pace the prior month, and they also forecast that building permits would increase to 530,000 annual rate.

But to give credit where it’s due, Maxwell Clarke, who is the chief U.S. economist at IDEAglobal Inc said even before the report came out that, “Weakness in housing continues. Declining prospects for developers should continue to act as a drag on investment and overall output in 2009″.

Mixed in with the bad news was a little good news however, because construction of single-family homes rose 2.8% to a 368,000 rate, and that was for the second straight month.

Overall the housing market is showing some signs of stabilization and confidence amongst U.S. homebuilders in May increased to the highest level since September, and although sales of new homes are still 70% below their 2005 highs, they have risen slightly from their record January lows.

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