New home sales flatline in August near record lows

The Census Bureau just released new home sales figures for last month. Here's a look at what they showed:

* New home sales flatlined at 288,000 units in August. That was slightly below forecasts for a sales rate of 295,000 according to Bloomberg, though it's worth noting the August sales rate was revised upward by 12,000 units. By region, sales declined 10.8% in the South and 26.1% in the Midwest. But they jumped 16.7% in the Northeast and 54.3% in the West.

* The raw number of homes for sale continues to sink. It fell to 206,000 in August from 209,000 in July. That's the lowest level going all the way back to August 1968 -- 42 years ago! On a months supply at current sales pace basis, inventory dipped ever so slightly to 8.6 from 8.7.

* What about pricing? Not much happening there. The median price of a new home dipped 0.6% to $204,700 from $205,900. That was the third month in a row of declines, and it leaves new home prices down 1.2% from a year ago. In fact, they're the lowest since December 2003.

New home sales remain depressed thanks to competition from the existing home market, lackluster consumer confidence, and labor market weakness. In fact, August's sales rate is only slightly above the nearly half-century low of 282,000 set in May. Or in plain English, we're not getting any significant bounce in the wake of the expiration of the home buyer tax credit. That's pretty incredible, frankly, when you consider home prices are at their lowest level in almost seven years and mortgage rates are the cheapest in the past century.

What's it going to take to heal the housing market? The passage of time. Lower prices. Less construction. And a broad economic recovery, one accompanied by much better job growth. So far, waiting for all that to come together is a bit like waiting for Godot. We'll have to see if that changes in 2011.

Existing home sales pop in August

We just got the latest read on the existing home market from the National Association of Realtors. Here's what the figures looked like ...

* Existing home sales rose 7.6% between July and August to a seasonally adjusted annualized rate of 4.13 million. That was roughly in line with the 4.1 million unit forecast of economists surveyed by Bloomberg. However, sales recouped less than a third of their 27% plunge between June and July and they remain 19% below their level of August 2009.

* By property type, single family sales gained 7.4% and condo and coop sales rose 8.5%. By region, sales were broadly higher. They rose 5% in the Midwest, 5.2% in the South, 7.9% in the Northeast, and 13.8% in the West.

* We now have 11.3 months of single-family inventory on the market, down from 11.9 a month prior. The condo market is sitting on 13.9 months of supply, down from 17.3. The median price of an existing home fell 1.9% to $178,600 from $182,100. That was up 0.8% from a year earlier, however. The raw number of homes for sale dipped to 3.982 million from 4.007 million.

It's not surprising that we saw a bit of a bounce back in the market in August, given the collapse in sales after the expiration of the home buyer tax credit. The problem is the subdued nature of the bounce. It's not much to write home about in light of the dramatic decline this summer.

What's the problem? While homes are cheap and mortgage rates low, potential buyers just aren't flooding into the market to take advantage of the bargains out there. This reflects the lousy job market and the lack of consumer confidence on Main Street. Unless the economy overall begins to improve -- and not by a small amount -- we'll likely see housing remain stuck in the mud.

Housing starts pop in August

We just got the latest read on home construction, this time for the month of August. Here's what the numbers showed ...

* Housing starts jumped 10.5% to a seasonally adjusted annual rate of 598,000 units in August from a downwardly revised 541,000 units in July. Building permits increased 1.8% to a SAAR of 569,000 from 559,000. That topped analyst expectations for readings of 550,000 and 560,000, respectively.

* By property type, starts rose a relatively modest 4.3% in the single family market. They surged 32.2% in the multifamily arena. On the permitting front, multifamily permits rose 9.8% while single family permits dipped 1.2%.

* How did the regional breakdown look? Starts fell 24.3% in the Northeast. But they rose 7% in the South, 21.7% in the Midwest, and 34.3% in the West. Permits were more subdued. They fell 2.5% in the South and 5.3% in the Midwest. Issuance flat lined in the Northeast, but surged 19% in the West.

The construction industry thawed out a bit in August after an unseasonal deep freeze earlier in the summer. Led by another large gain in multifamily construction, starts rose to their highest level since April. The gains were relatively broad-based across the country, too. Permitting activity was more subdued, however, with the core single-family home market contracting for the fifth month in a row.

I've been saying for a while that the housing market is caught betwixt and between opposing forces. Housing is affordable again thanks to the combination of cheap mortgage rates and falling prices. But qualification standards are tighter than in the past, while buyer confidence is lacking thanks in large part to the lousy labor market. We also have a large overhang of distressed, "used" homes.

The result is a rather subdued operating environment for the construction industry. Starts likely won't plunge from here. But neither will they surge. We'll just be stuck in the mud for a while.

NAHB index flatlines in September

The National Association of Home Builders just released its latest read on the state of the housing market. The group's index flatlined at 13 in September, compared with expectations for a slight rise to 14. The subindices for present sales and future sales were both unchanged (at 13 and 18 respectively), while the subindex that measures prospective buyer traffic fell to 9 from 10. That's the lowest level since March 2009.

The regional breakdown was mixed, with two declines, one gain, and one unchanged reading. The Northeast index slipped to 16 from 18 while the Midwest reading dipped to 12 from 15. The Southeast index ticked up to 14 from 12, while the West index held steady at 8.

The new home market remains stuck in the doldrums. That's the latest read from the NAHB. Current sales remain at depressed levels, while expectations about future sales aren't budging. Meanwhile, fewer shoppers are walking through showroom doors -- a sign that Americans by and large just aren't that excited about the prospect of buying a house. Houses are cheap. Mortgage rates are low. But the lousy labor market and a lack of confidence is keeping buyers on the sidelines.

Pending home sales climb in July

We just got the latest pending home sales figures from the National Association of Realtors. They showed that in July, pending sales rose 5.2%. That compared with forecasts for a 1 percent decline, but it still leaves sales down 19.1% from year-ago levels. By region, sales were up 6.3% in the Northeast, 4.1% in the Midwest, 1.2% in the South, and 11.6% in the West.

File this report in the "At least things didn't get worse!" category. We saw a small bounce in pending home sales after two dismal months, with the index rising for the first time since April. The gains were geographically diverse, with the West showing the biggest rise. It appears the used home market cannibalized some sales from the builder market, given the fact new home sales plunged in July.

Bottom line: The news isn't terrible. But it's not great either, especially when you consider that mortgage rates are the lowest in recorded history. We should be seeing more sales with financing so cheap. The fact we're not speaks to the severity of the jobs crisis and the ongoing lack of confidence in the future direction of home prices.