By John Galt
May 24, 2011
First, read the propaganda from the MSM:
The last headline is particularly amusing because when you break down the truth of the inventory story is that the home builders are holding inventory off the market which is why in many budding subdivisions you will see ten homes for sale and forty slabs or partially started units that look as if no work had been completed in months. The same report from the Commerce Department indicated that the median months for sale was up to 8.8 months, hardly an indicator of improvement despite this seasonal bounce. The mainstream media basically highlighted the 7.3% increase month over month, not the 23% decline year over year. In fact when compared to previous years during and before the recession the drop is even more stark:
April 2011 v. April 2010: – 23%
April 2011 v. April 2009: 0%
April 2011 v. April 2008: – 35%
April 2011 v. April 2007: – 62%
and just for fun:
April 2011 v. April 1962 (first year of tracking this data): – 39%
In other words the new home sales are still bumping along the bottom and some members of the mainstream media did recognize this fact. Thus after this seasonal bounce and addition to inventory with the new homes under construction being added to the mess which will soon accelerate as the banksters resolve their foreclosure paperwork issues.
The chart for the new home sales reflect this bounce but at a non-seasonally adjusted 32K new home sales, that is nothing even close to levels comparable with non-recessionary or depression era periods:
Until the monthly sales top 50,000 units per month for several months, the new home sales market will continue to be in a depression. The sales under $299,000 also reflect the tentativeness of the middle class to re-enter the new home sales market:
Once again, the lack of employment stability is impacting this price range although those sales for units under $150,000 and with some government assistance (HUD starter homes) are showing signs of life yet not an indicator of the middle class gaining confidence. Until the existing home sales reflect the ability to sell their homes at a profit and not a loss, there is no reason for the average family to think about upgrading or relocating to a new home.
In the luxury and upper-middle class price range of $300K plus, the numbers have bounced up slightly also:
The most notable improvement in this price range related to the $400K plus where the wealthier individuals in our society have found the new home bargains or ordered the type of home they have been looking for as discounting is the rule of the day.
As the summer wears on if the markets fail to achieve consistent 50K plus numbers month over month, then the construction employment situation will remain in the doldrums. Based on the permit and new construction data trends this aspect of the economy will not be recovering any time soon.