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House Sales Fall, Prices Near 9 Year Low

From a seemingly surprised Reuters:

Home sales tumble, prices are near 9-year low

By Lucia Mutikani, Mon Mar 21, 2011

WASHINGTON (Reuters) – Sales of previously owned U.S. homes plunged in February and prices hit their lowest level in nearly nine years, indicating a housing market recovery was still a long way off.

The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July

Sorry, but we don’t believe the "three straight months of gains," either. (And, lest we forget, the National Association of Realtors overly rosy housing numbers have been thrown in to doubt recently.)

Economists had expected a decline of only 4 percent to a 5.15 million-unit pace. The actual drop was greater than even the most pessimistic forecast in a Reuters survey of 53 economists.

That is a shock. Just kidding. The shock would be if these economists ever got once prediction right.

Analysts said harsh winter weather in January could have curbed February sales

Because there has never been winter weather in January before.

NAR said the median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002, in a sign of the relentless downward pressure on prices from a market flooded with foreclosure sales

Lest we forget, this is why inflation is ‘so low.’ You see, the loss of equity in your house makes up for the increase in food and energy costs. So there’s nothing to worry about.

"If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market," said Lawrence Yun, the trade group’s chief economist…

While sales plunged in all regions last month, economists said the pattern was likely to become less uniform in the months ahead, with regions where the labor market is fairly strong showing more life than others.

Tell us more what the economists think.

This article was posted by Steve on Monday, March 21st, 2011. Comments are currently closed.

3 Responses to “House Sales Fall, Prices Near 9 Year Low”

  1. Petronius says:

    March economic snapshot :

    • New and existing home sales, construction, and home values remain comatose, but hopefully they are in the process of forming a bottom. We’ll know in another year or so.

    • Unemployment rose to about 10%, essentially unchanged since March 2010. Unemployment is 13.5M (official), or 24.2M (actual).

    * Consumer confidence fell in March as oil prices climbed to $100 bbl.

    • Oil price spikes are always followed by a recession. They are generally also followed by stock market declines. The question this time is how long the spike will last.

    • Mary Meeker, in a feature article in Bloomberg’s “Businessweek” (24 Feb 2011), asked whether you would invest in a company that lost $2T last year and has a negative net worth of $44T? She was referring of course to the Federal government.

    • Since 1965, when LBJ’s Great Society created Medicare, Medicaid, and lots of other stuff, the costs of these entitlements have been rising steadily while private savings and investment have been falling steadily. As a result, since 1965, entitlements have increased 11.1 times, but GDP has increased only 2.7 times. Liberals have just added a big, new entitlement, Obama-care.

    • By 2025 (only 14 years from now) entitlements and interest on the national debt will consume 100% of government tax revenues. In other words, there will be nothing at all left for military defense, border patrol, the courts, embassies, interstate highways, earmarks, Congressional salaries and perks, presidential holidays, NPR, ACORN, the San Francisco swamp mouse, or anything else. Nothing. Nihil. Nichts. Nada. Zip.


    • US public debt continues to spiral out of control. February was the largest one month increase in history.

    • Each American citizen now owes $177.7K in public debt.

    • In February two highly respected central bank officers resigned, one from the Federal Reserve and the other the head of the German central bank. Their reason in both cases was the same –– money creation to buy government bonds to support government deficit spending.

    • On 19 March, IMF’s John Lipsky warned that the public debt of advanced countries is unsustainable and that these countries are at risk of fiscal crisis. Lipsky, formerly chief economist at JPMorgan Chase, said the average public debt in advanced countries now exceeds 100% of GDP.

    • In the US the public debt has grown 72% in the last few years, and now stands at $14.25T and State debt at $1.17T. American GDP is $14.6T, for a total public debt-GDP ratio of 105.6%.

    • Lipsky warns that interest rates are poised to rise, which may precipitate defaults on public debt in some of the advanced countries. Greece and Ireland are insolvent. Portugal is on the brink.

    • China and Japan offered to help with the latest EU bailout, but Japan is now sidelined by its own problems.

    • Bank of England also warned that interest rates are poised to rise. Rising interest rates means that countries will have difficulty supporting their debt load, bond prices will fall, and economic activity will decline.

    • Bond guru Bill Gross has divested the PIMCO funds of all US government bond holdings.

    • Global stock markets and emerging markets have been shaken by the nuclear crisis in Japan, popular uprisings in North Africa and the Mideast, and rising oil prices. Unrest continues in varying degrees in Libya, Egypt, Bahrain, Yemen, Iran, and Saudi Arabia, and is beginning to spread to Syria. China is cracking down on internet protesters.

    • The Japanese disaster is doing serious economic damage. Economic growth has slowed worldwide.

    • The abrupt blow to Japan –– the world’s third largest economy and America’s fourth largest trading partner –– is a world-changing event. It is difficult to predict all of the repercussions.

    • In order to rebuild, Japan will have to buy materials from other countries at the same time that its exports are dropping.

    • Japan may be forced to buy oil at high prices to replace lost nuclear energy.

    • Japan’s public debt to GDP ratio is 200%, or double that of the USA. More debt will be incurred for rebuilding. Debt crisis, monetary crisis, bank crisis, shortages of manufactured goods, and political upheaval are all within the realm of possibilities.

    • For the US, this means that Japan may no longer be a buyer of our government debt. If the Fed has to take up the slack, that means printing more money.

    • Copper prices have retreated, indicating a slowdown in global economic activity.

    • Gold and silver prices remain strong near their bull market highs, supported by safe haven buying.

    • The Swiss franc has been soaring to new record highs. All major foreign currencies are moving higher against the US dollar.

    • The US dollar continues to fall. It is going to fall a lot more.

    • China is the world’s leading producer of gold. In January and February it bought 200 metric tons of gold on the world market. China is encouraging its citizens to buy gold for their savings accounts.

    • In January, the US cost of living rose for the seventh month in a row.

    • In the last four months producer prices have increased at an annualized rate of 9%.

    • Inflation is well underway in the USA, the result of irresponsible government spending and Fed money creation. Far more money has been created over the past two years than at any time in US history. The main impacts have yet to be felt.

    • Food and oil prices are surging, but we are probably seeing just the early stages. Food riots triggered the uprisings in Egypt and Tunisia. People all over the world are experiencing a loss of purchasing power. The UN warns of the risk of food riots in Bolivia and Mozambique.

    • Rising oil prices drive prices higher on all commodities. This is especially true of food, as oil is the main cost for fertilizer and farm machinery.

    • As long as the Middle East and North Africa remain under tension, the oil price will remain high, the cost of food and other commodities will remain high, and economic activity will come under pressure, raising the specter of a double-dip recession in America.

    • It also raises the possibility of another round of Fed QE. The Fed’s QEs depreciate the US dollar and push up commodity prices.

    • In addition to abundant coal and natural gas, we have domestic energy resources in the form of oil shale deposits and Gulf, Alaska, and offshore oil, but production from these sources remains blocked by Liberal political policies.

    • Senior citizens in the US may find themselves impoverished by the triple whammy of (1) rising prices for food, energy, and healthcare, (2) ObamaCare, and (3) falling bond values, lost savings and pensions.

    • Apart from Tea Party Republicans, the political will to deal with these threats is absent. In fact, government policies are making the situations worse. In fact, Liberal spending and energy policies appear deliberately designed to drive the country into fiscal and monetary crises.

    • tranquil.night says:

      What’s amazing is that I’m getting emails from hedge consortiums and market analysts who still remain willfully blind to half of these details, in favor for this desperate feeling that signs of recovery remain strong. If they’re left with no choice but to raise interest rates, then we’ll see the next phase of accelerated degredation. Also, the looming showdown over spending cuts and the debt ceiling. Great work and thank you Petronius. Very important info, very crisp and concise presentation.

    • proreason says:

      Imagine how bad things would be if Obamy hadn’t herioically saved us from the brink.

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