But, I'm surprised by the surprise. By that I mean did the market think new home sales would keep declining at that torrid pace? If so, that would have meant negative sales at some point in the near future... not exactly possible.
We're still at levels last seen in 1979. A time at which the U.S. population was roughly 80 million people smaller.
So... good news? Yes, but I wouldn't argue that this means the worst in overall housing is definitely behind us.
Source: Census
And what about the November 30th expiration of the tax credit for first-time home buyers? I think that is altering demand in the near-term. It also explains why housing starts increased in single-family homes while general residential was down in the last release.
ReplyDeleteYou seem to be arguing that the fact that we're at historically bad levels means we're more likely to get worse from here.
ReplyDeleteThis is the classic rates vs. levels confusion you're usually trying to clear up.
Agreed, though, that it's not definitely behind us.
i'm not saying that unit levels of new home sales won't improve. what i am saying is that the overall situation in housing (i.e. price levels, foreclosures, etc...) will get worse.
ReplyDeletenew home sale units sold on a stand alone basis is irrelevant. how can it get much worse then here?
I misunderstood your argument. I'm probably oversensitive to the rates vs. levels issue.
ReplyDeleteAnd so if we're talking about prices, yes, it seems that there's still a good chance for prices to go lower.