With apologies to Homer Simpson's Jack Nicholson impression, "No free money and no quick flip makes homeowners ... something, something ..."
"Drop prices?" Don't mind if they do.
Data released today by the National Association of Realtors (NAR) shows that home prices are plummeting just as sales are flagging. In other words, it's exactly as some of us bubble-bursters have been predicting for a while. Too much supply and not enough demand moves the needle firmly in the opposite direction of what the majority of (delusional) Americans seem to think. Houses are worth less now than they were. Fewer are selling. This goes hand in hand, and I don't think we've seen anything yet.
But back to this month's bad news. The chuckleheads in the mainstream media will probably report the numbers sequentially, following the lead that's taken by the NAR, hoping to put lipstick on the pig. Don't be fooled by the likes of the AP, which reports the sales volume comparison from month to month. The real story is in the annual comparisons, and things there are ugly.
Let's compare. Home sales "essentially unchanged" is what the six-percenters at the NAR would like to see reported, but from May 2006 to May 2007, sales dropped an impressive 10.3%.
The median price of a home dropped yet again, down 2.1% from last year at this time. As always, keep in mind that these prices are, quite likely, already unreasonably inflated by desperate givebacks that sellers have been using to move homes, givebacks that are not netted out of reported sales prices. In other words, the truth is probably worse. (Alas, no one really knows how much worse.)
That didn't stop the folks at the NAR from the usual spin, with President Pat Combs giving the Bizarro-world soundbite, "...higher inventories are helping to offset an affordability impact from higher mortgage interest rates."
With longtime bubble-apologist David Lereah gone, the new Chief Economist at the NAR, Lawrence Yun, blamed "psychological factors," for the drop in prices and sales, not the 5% increase in home inventory, which puts a nearly nine-month inventory of homes on the market. And this as interest rates keep rising and another few huge slugs of sub-prime and Alt-A, "liars" loans begin to reset higher through the end of this year.
In other words, there's a very good reason that the confidence of homebuilders like Pulte Homes
What's next? Something. Something.
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