This entry was posted on Thursday, November 30th, 2006 at 12:09 am and is filed under Sac Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
October New Home Sales
Has the real estate market hit the bottom?
Don’t bet on it. Despite the aggressive incentives offered today by builders, new home sales are slowing dramatically. According to the report issued today by the U.S. Census Bureau and HUD, October sales are 3.2% lower than last month and 25.4% off the October 2005 pace. As dramatic as these figures are, they actually understate the slowdown.
That’s because of the way the Census Bureau and HUD handle canceled sales contracts. You see, they consider a home sold when the “contract {is} signed or earnest money exchanged.” And when, as it so often happens these days, the buyer cancels a contract, those sales figures are not revised. “Since we discontinue asking about the sale of the house after we collect a sale date, we never know if the sales contract is canceled or if the house is ever resold.”
To compensate, the Bureau refrains from counting the sale a second time when the home is eventually resold. In other words, each home is counted only once. It all works out in the end says the Bureau. Fair enough. But in a market like ours with a lot of cancellations, that methodology makes things look better than they really are.
There are many who believe that the worst is over. I’d love to pop the cork, but it may be too soon to celebrate.
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January 5th, 2007 at 9:58 am
[…] I fully expected this brief flurry to subside, but so far is appears to have legs. Local predictions for the Sacramento real estate market still predict that values will fall a bit more in 2007 as supply and demand find their equilibrium. Inventory levels are still high, and I’ve written previously that I do not think they are falling as quickly as the HUD and Census Bureau reports indicate. The trauma is not over. But perhaps the patient has been stabilized and we can now look forward to a gradual return to normal health. All in all, 2007 looks far more promising that 2006. […]
January 8th, 2007 at 1:05 pm
[…] This just out from Mark Zandi of Moody’s Economy.com. I said the same thing in my post of November 30th October New Home Sales. Inventory levels are distorted by the HUD and the Census Bureau’s methodology, overstating the decline in housing inventory. The real estate hangover ain’t over yet folks […]