Existing home sales data was released today - a paltry 4.98M annualized home sales in the month of October (so: 4.98/12 = 415,000 homes sold/50 states = an average of ~ 8,300 existing homes per state sold). Additionally, October prices dropped the most in over 40 years of record keeping.
Consider this release to be one more nail in the coffin for deteriorating consumer confidence - leading to a dismal holiday season for retailers.
Bloomberg: Home Sales Fall; Record drop in prices (40yr record price drop)
Nov. 24 (Bloomberg) -- Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.
Purchases of existing homes slid to an annual rate of 4.98 million, lower than forecast, a National Association of Realtors report showed in Washington. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.
Today’s figures indicate a renewed downturn in an industry that showed signs of stabilizing this year, hurt by the credit squeeze and record mortgage foreclosures. That may raise pressure on President-elect Barack Obama to aid homeowners and potential buyers as he assembles a record stimulus package.
“Home sales will continue to fall over the next few months because of tightening credit conditions,” said Sal Guatieri, senior economist in Toronto at BMO Capital Markets, which had the closest estimate for the sales level among 67 forecasts in a Bloomberg News survey. “Underlying demand appears very weak” because “many sales are coming from cheap prices on foreclosed properties,” he added.
At a press briefing in Chicago today, Obama said one of his objectives will be “addressing the growing foreclosure crisis,” and he called on his economic team to develop a stimulus package of the “size and scope necessary to get the economy back on track.” Obama aides and Democratic Senator Charles Schumer have said a stimulus package of as much as $700 billion may be needed to shore up the economy.
Businessweek: Housing industry wants a big government bailout
Bailouts are in fashion. The financial industry got one. The automakers have their hands out. Now the National Association of Home Builders and the National Association of Realtors are pushing their own multi-billion-dollar stimulus proposals.
The proposals are designed to get buyers off the fence and rejuvenate the flagging home sale market. The more expensive proposal comes from the home builders who want a $250 billion Fix Housing First package, which calls for a home buyer tax credit of 10% of the purchase price (up to $22,000) and a heavy subsidy from the federal government that would bring 30-year mortgage rates down to 3% for homes bought in the first half of next year and 4% for purchases in the second half, according to The Wall Street Journal.
The Realtor plan sounds is somewhat modest by comparison. The group also wants taxpayers to subsidize mortgages to bring down rates by about 2% — at a cost to taxpayers of about $100 billion. And it wants the homeowner tax credit approved by congress this year to be changed so that the $7,500 credit can be given to all buyers, not just first-time buyers and that it no longer would have to be paid back. That part of the plan would cost another $40 billion, the group’s chief economist Lawrence Yun told me today, adding that he thought the builder plan was too expensive.
Finally, the Realtors want the higher limits for federally-backed jumbo loans of up to $729,000 to be permanently extended (They’re set to expire next year).
Bloomberg: Bernanke Tells New Yorker He Underestimated Housing Meltdown
Federal Reserve Chairman Ben S. Bernanke said he underestimated the impact subprime mortgages would have on the economy, according to an interview to appear in the New Yorker magazine’s Dec. 1 edition.
“I and others were mistaken early on in saying that the subprime crisis would be contained,” Bernanke said. “The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.”
Widespread failures of U.S. subprime mortgages, home loans to borrowers with poor credit records, started in 2007, touching off a financial crisis that has spread to other sectors of the world economy.
The article, entitled “Anatomy of a Meltdown,” said Bernanke and Treasury Secretary Henry Paulson tried what Bernanke and his Fed colleagues called a “finger-in-the-dike” strategy to keep the financial sector operating long enough so that it could repair itself. As recently as this Sept. 1, the article said, Bernanke thought that strategy would work.
Poor guy... I think I'll shed an alligator tear for him now... I'd really like to think that maybe, just maybe, if he had peeked at this lay economist's blog between.. oh say 2005 through 2008, he might have received a clue.
B.S. Flag! He knew exactly what was going on, but he, Greenspan, Paulson and the rest of this lying band of thieves are completely incapable of telling the public the truth - their entire charade game of public confidence is built on a web of lies that has been morphed, compounded and multiplied so many times over it is now impossible to utter any truth - as it may yet unveil another lie and lead to a collapse of their web-o-deceit and, in-turn, their massive pyramid of debt.