Once again, the Corporate media has falsely claimed the housing market has "bottomed out." Once again, they have touted a very limited number of statistics to support this claim, while ignoring the bigger picture. Last Friday the media (and goverment) used the "improvement" in New Home Sales for December to support their claim of a recovery in housing. A view of the bigger picture, however, shows exactly the opposite.
Friday's New Home Sales report provided another falsely optimistic view of the housing market. The December increase of 4.8%, coupled with the upward revision of November's numbers, provides the ammunition for those falsely claiming that the bottom has arrived. The currently published annualized 1.5% price decline contradicts any positive interpretation. Furthermore, the annualized sales rate for December 2006 of 1.120 million is 11.5% less than December 2005's previously posted 1.266 million. The year-over-year change in New Home Sales for 2006 was -17.3%. This can be seen in the chart below from the U.S. Census Bureau.
Also of interest is the downward revision of every single monthly New Home Sales report from March 2006 through October 2006. The previously posted numbers are in italics and parenthesis on the right side of the most current numbers for each month.
The sum total of the downward revisions totals -524,000 New Home Sales. Every month prior to November was overstated initially, and then downwardly revised at a later date. Since the number of New Home Sales were overstated every month, it provided a more optimistic number than the actual, final number.
Existing Home Sales have also declined sharply since last year. In the next post there is a copy of Briefing.com's January 2007 report (on the top), compared with their report published in January 2006.
----
Another factor affecting December New Home Sales, as pointed out by economist Dean Baker, was the effect of the warmer-than-usual weather in both the Midwest & Northeast in December. The expected effect of warmer weather would be to increase the number of homes sold in the affected areas. Sure enough, the entire increase in New Home Sales was confined to the Midwest and Northeast. Sales in the South were essentially unchanged. Sales in the West declined 11,000. The increase in New Home Sales in both the Northeast and Midwest alone totaled an annualized increase of 68,000, more than the nationwide total increase of 51,000.
It appears likely that the "increase" in the annualized rate in December would not have even occurred without the unseasonally warmer weather in certain parts of the country.
unlawflcombatnt
Economic Populist Forum
EconomicPopulistCommentary
The economy needs balance between the "means of production" & "means of consumption."