Positive Surprise in Broader Market Data
May 24, 2006 — Sales of new U.S. homes surprised economists and stayed strong in April, the Commerce Department reported Wednesday. New-home sales rose 4.9% in April to a seasonally adjusted annual rate of 1.20 million, the highest level of the year. Economists surveyed by MarketWatch had been expecting the pace of new-home sales to…
May 24, 2006 — Sales of new U.S. homes surprised economists and stayed strong in April, the Commerce Department reported Wednesday. New-home sales rose 4.9% in April to a seasonally adjusted annual rate of 1.20 million, the highest level of the year. Economists surveyed by MarketWatch had been expecting the pace of new-home sales to cool to 1.15 million units, as part of a general slowdown underway in the housing sector. Economists cautioned against reading too much into the rise in April, but said the report fits in with the Federal Reserve’s expectation of an orderly decline in the market. This is the second straight monthly gain in new home sales after sales fell in the first two months of the year. Sales are down 5.7% on a year-over-year basis.
New-Home Sales Rise 4.9% [Real Estate Journal]
No suprise to me. Might be just a kink. There were similar instances of negative “suprises” within the last few years. Trends have to sustain themselves over time to be significant.
I think the bubble is a terrible analogy for something like real estate anyway. It works for a stock market, where prices can drop in a heartbeat, but not something where individual sales average 2 mos.
That said, I still think prices will drop – inventory is way up, interest rates are rising, sales are slowing. It all works together, and to think that a business area can have a massive runup and not go down just makes no sense to me, whether you call it a slowing or a bubble.
Cooling is one thing. Few people could expect the pace of sales to continue at level. A cooling meaning a return to more normal pace and a bust -where sales are slow compared to a normal -not a torrid pace are different.
Then pace of sales and sales prices are not one in the same.
Cooling of the pace of sales and slow increase in prices is a positive – not a bubble bursting.
But that was after a downward adjustment in March, so in fact, sales dropped.
The economist for the NAHB downplayed the data, stating that he still believed the market was cooling and not to take this information as a sign that it was not. You may think it’s nuts but it’s true – after all, if you take this info as good news, here comes one more rate hike guaranteed.
It’s time to just face it – housing is slowing and that’s how it’s going to be. It’s funny that people think it just can’t slow down.
Good news just keep on coming our way. Before long, we can celebrate the 10th anniversary of the first “bubble about to burst” theory.