I had to laugh today watching bubblevision and their reaction to a 2.4% uptick in new home sales in July versus a 2.1% drop in June. Here is the story:
"Sales of new homes posted an unexpected gain in July as heavily discounted properties enticed cautious house hunters to become home buyers.
But sales in June turned out to be much weaker than the government previously estimated.Sales sank to a pace of just 503,000, the worst showing since September 1991. Economists were expecting sales to drop in July.
The news follows Monday's report that sales of previously owned U.S. homes ticked higher in July thanks to lower prices, but record inventory suggested the battered housing market is unlikely to recovery soon.
Earlier Tuesday, Standard & Poor's reported that U.S. home prices fell a record annual 15.9 percent in June, but the monthly rate of decline slowed from May which suggested the housing sector may be stabilizing."
My Take:
The financial media is a joke. They revise the June number downward, and then announce that home sales were up in July by a whopping 2.4%. Without the downward revision, home sales were most likely not up in July. Please read these press releases before you believe the hype!
Of course the housing market is now showing signs of stabilizing according to the cheerleaders. Yeah its stabilizing alright, at an abysmal 500,000 units a month. Inventories are still over 10 months which is almost twice the historical norm.
The market read right through this report and continues to trade in the red.
Hurricane Gustav
Keep an eye on one this folks. Gustav looks like it has the potential to become a monster hurricane, and it looks like its heading right towards the gulf and our oil refineries. You can follow Gustav here:
Bottom Line:
Oil is up due to the hurricane and the instability in Georgia. I have seen computer models that predict Gustav will strengthen up to a Category 3 by the weekend. Oil could soar depending on its track.
I expect a relatively flat day today unless the Fed minutes say something unexpected. A we head towards Labor Day, the volume should shrink dramatically and the volatility might drop a bit minus any surprises or shoe drops.
Stay Tuned!
4 comments:
Is there any data out there that shows the average time it takes for a sub prime loan to default after the rate resets. I'm guessing that there isn't enough data out there or everyone's situation is so different. I keep wondering how long it will take before we see the results of the huge peak in resets($10s of billions more than what started this all last year.) Whenever I see an article talking about a possible bottom I want to grab these reporters by the back of the head and shove this graph in their face: http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg
We shouldn't even be hinting at a bottom until 2012 when all of these bad mortgages work their way out of the system.
anon
Great point. These bottom callers will drive you crazy won't they?
I will look for data on the time to foreclosure following a reset. My guess is many will continue to battle to stay in their house so you have a very valid point.
I have heard some our using their credit cards to pay their mortgages just to stay in their house. This is beyond stupid but its being done.
2012 could be the right call for a bottom. Housing cycles take a long time to get through from top to bottom.
Home prices in Japan still haven't recovered to the levels they were at in 1989!
Time will tell.
I was just talking to my brother about all this and he said that Minnesota made option adjustable rate mortgages illegal retroactively. His neighbor is a mortgage broker and all he has been doing for the past 8 months is calling up old customers and refinancing their mortgages. Hopefully a lot of other states are doing the same.
anon
That sounds all well and good but at what interest rate?
Rates are way higher versus when those loans were made.
I would love to hear from his neighbor what his success rate is at refinacing thosebprimers.
I bet most of the loans don't get approved.
I think its good that its now illegal but unfortunately, I bet 80% of those buyers are screwed.
GOing forward this will be a positive thing for MN.
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