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The latest month's numbers show the lowest number of sales on record (PDF - http://www.census.gov/const/newressales.pdf). The data goes back to 1963, so that's saying quite a bit. It's also the biggest month-over-month decrease on record (even after a massive downward revision to the previous month's sales figures). Everyone rushed to close in April and that pulled in what little demand there is from the future - and now that future has arrived.
I guess we've found the answer to what happens to the RE market when the government stops paying people to buy houses - the answer is that people stop buying. With these government welfare programs expiring, we'll find out what the housing market really looks like over the next few months. So far it looks a bit scary.
Everyone rushed to close in April and that pulled in what little demand there is from the future - and now that future has arrived.
yep, that's a good analogy for the effects of borrowing money in general. The immediate inflationary event of all that new "free money", followed by the long, slow, deflationary pressure caused by somebody having to pay it all back. Welcome to our bright future!
I guess we've found the answer to what happens to the RE market when the government stops paying people to buy houses - the answer is that people stop buying. With these government welfare programs expiring, we'll find out what the housing market really looks like over the next few months. So far it looks a bit scary.
Is it that people stopped buying or that they just bought earlier? I don't think we will know the answer to the question until enough time has passed.
Or maybe people can't get loans for what they want.. (though I suspect the reason is because of the end of the tax credit).
I'm in a frustrating situation with a townhome right now. I'm well-qualified and can put 20% down, yet even the credit unions I spoke with will not issue a loan because the complex, which contains 12 units, does not meet Fannie Mae owner-occupancy guidelines and the credit unions sell their mortgages to Fannie. It's an intersting situation because I don't WANT a single-family home in the neighborhood I want to live in because the only type of SF home I can afford are fixer-uppers with no garage. This townhome has a 2-car garage and is newer construction. Anyway, if I can't find financing, I'm just going to continue to rent rather than settle for something I don't want, even though I've got my finances in order.
New home sales don't always give a great indication since they only account for about 5% of homes sold.
Existing home sales were down 2.2% from April 2010 (5.79 million units) to May 2010 (5.66 million units) but were up 19.2% above May 2009 (4.75 million units).
Or maybe people can't get loans for what they want.. (though I suspect the reason is because of the end of the tax credit).
I'm in a frustrating situation with a townhome right now. I'm well-qualified and can put 20% down, yet even the credit unions I spoke with will not issue a loan because the complex, which contains 12 units, does not meet Fannie Mae owner-occupancy guidelines and the credit unions sell their mortgages to Fannie. It's an intersting situation because I don't WANT a single-family home in the neighborhood I want to live in because the only type of SF home I can afford are fixer-uppers with no garage. This townhome has a 2-car garage and is newer construction. Anyway, if I can't find financing, I'm just going to continue to rent rather than settle for something I don't want, even though I've got my finances in order.
Try putting down 30%... I think banks have a right to worry about townhomes, condos, etc, to me they are a market for specific crowds that can't afford a single family home or don't want one... to me their value is almost worthless unless it has an incredible location or is a "luxury" version... only reason I would buy one would be to rent it out... up your downpayment and the banks might be more interested...
New home sales are contracts. Existing home sales are contract settlements. They will lag behind the trend in contracts and should peak in mid-summer. Normally, contracts peak in July and settlements peak in August/September.
Setting the end of April as the end of the HBTC program may have caused contracts to have peaked earlier than usual.
Extending the closing for the HBTC purchases may also result in more cancellations since a lot of the buyers are flips (20-40%). Each time that HBTC was announced, HUD has loosened the rules on loans to flips.
New home sales are contracts. Existing home sales are contract settlements. They will lag behind the trend in contracts and should peak in mid-summer. Normally, contracts peak in July and settlements peak in August/September.
Setting the end of April as the end of the HBTC program may have caused contracts to have peaked earlier than usual.
Extending the closing for the HBTC purchases may also result in more cancellations since a lot of the buyers are flips (20-40%). Each time that HBTC was announced, HUD has loosened the rules on loans to flips.
No, new homes sales are homes that were just built and sold for the first time, existing home sales are homes that were previously owned.
This data is so misleading. As Mike said above, it's for "new construction", right? Well, does it take into account that builders have pretty much stopped building new construction? What is the ratio of new-construction sales to inventory? It also causes confusion because people obviously think it includes sales of existing homes, as evidenced here by...well, the confusion. This type of headline is depressing, misleading and doesn't do anything to pump people up to buy.
The reabtes have had a posstive effect on slaes in many areas asevidenced by houisng cost.Toughing lending satndards have had a negative effect. You can alkso bet that as people persecive that thye fed is close to raising rates poeople will move agin . There is still alot fo cash onthe sidelines. Buit then we alos see thatoen of the goals of the fed from Geiother testimony is to get back to the 655 rukle on homeowenrshipo that reflacts those that can afford to actually own. That is what their figures shows in apost that was riase sebvarl per centage pointsa. I would bet that his sating that they do not want to save the homes of those that can't afford them shocked many. Reality always does especially with the congressional years of doing anyhtig to make homes purchaseable ;not necessary affordale to all.In these economic times people also are holding back and as things improve many holding back will move.We are not talking about a return to bubble levels.
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