Housing prices fall more than expected in the first quarter–thanks to foreclosures

The hits keep coming. No wonder the Federal Reserve isn’t in any rush to raise U.S. interest rates.

U.S. home prices dropped 5.5% in the first quarter of 2011 from the first quarter of 2010, according to the Federal Housing Finance Agency. That’s the biggest drop in almost two years. Read more

April slowing in housing starts is bad news but not a surprise

I’m seeing headlines calling the 11% drop in housing starts announced this morning (May 17) in April from March “surprising,” but I don’t see why. Flooding and tornadoes in the South shut down construction sites in a big swath of states this spring. (April 2011 was the 10th wettest April since the start of records in 1895. The 875 tornadoes reported in the month are a record.) Housing starts in the south fell 23% from March levels.

But whether you’re surprised or not, there’s no doubt that the housing industry continues to struggle two years after the current economic recovery started. Housing starts in April came in at a 523,000 annual rate. That’s 11% below the annualized rate for March and considerably short of the 569,000 rate forecast by economists, according to Bloomberg.

There’s no quick turnaround in the cards either. Read more

Foreclosures are killing home sales and housing prices

The September 22 report on housing prices from the Federal Housing Finance Agency has turned out to be not just depressing but depressingly accurate. According to the agency, prices in July fell 0.5% from June. That was worse than the 0.2% decline projected by economists. In addition the government agency revised previously released data to show a 1.2% drop from May to July instead of the earlier 0.3% decrease.

So it shouldn’t be any surprise that the September 24 numbers on August new home sales from the Department of Commerce were equally grim. The median price in Commerce Department figures fell to its lowest level in more than six years at $204,700. The top line numbers showed that new home sales were unchanged in August from a terrible July. The August sales rate in 2010 was down 29% from August 2009.

And before you get too comfortable with the top line numbers—if August was terrible but only as terrible as July, may be we’re seeing a bottom in the housing market, you might think—notice that it was only the statistical tool know as seasonal adjustment that prevented the August numbers from being worse than July’s. Read more

More housing data tomorrow: Will the numbers be as positive as Tuesday’s were (at least on the surface)?

We’re half way—but only half way—through the week’s housing numbers.

So far the headline numbers have been good—although digging deeper takes much of the gloss off the data.

On Tuesday, September 21, new home starts came in solidly above expectations. Building permits climbed from their record low. New home starts came in at an annual rate of 598,000. That was a 10.5% increase from July’s 541,000 rate. According to Briefing.com, economists had been expecting a very slight increase in new home starts to 550,000.

Building permits, traditionally seen as an indicator of future housing activity (since you can’t start building a house without a permit), climbed to 569,000. Economists had forecast a 560,000 rate. That was again a solid improvement from July when permits hit a record low of 559,000.

But you need to keep this news in context: Yes, it’s a big jump from July’s terrible numbers, but year to year, comparing August 2010 to 2009, the numbers actually show how anemic the recovery in the housing market is. Housing starts climbed just 2.2% from August in 2009. Building permits actually dropped by 6.7%.

Investors will get more housing market data on Thursday, September 23, with the release of existing home sales for August. Read more

The Fed reads the papers too–and this week’s plunge in home sales scares Bernanke and Co.

The numbers released on August 24 on sales of existing homes may even scarier than they look.

Scarier than a 27% drop in July to an annual sales rate of just 3.83 million? Scarier than the lowest annual sales rate in the 15 years this number has been recorded?

Well, yes. Because this figure suggests that all our worst fears about the housing market and the U.S. economy may be absolutely correct. And I think that interpretation of the housing numbers is a major reason that on August 27 Federal Reserve chairman Ben Bernanke just about promised the Fed would go back to its policy of buying Treasuries and mortgage-backed securities to support the economy.

The fears start with the possibility that this huge drop shows that the government’s recently ended tax credit of $8,000 to home buyers didn’t do a thing to actually stimulate the housing industry. Instead, today’s huge plunge seems to indicate that any gain in sales during the stimulus came from borrowing future sales. Read more