Bloomberg reports that
Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged.
....
The index of leading economic indicators unexpectedly increased in December as the money supply expanded, a report from the Conference Board, a New York-based research group, showed today. The 0.3 percent increase was the first gain in six months and masked signs of a worsening recession.
....
The number of previously owned unsold homes on the market at the end of December represented 9.3 months’ worth at the current sales pace, down from 11.2 months’ at the end of the prior month.
A few comments:
Last week I noted the silver lining from record declines in housing starts was that it was like we were pulling our an abcessed tooth quickly rather than slowly. Today's news on existing home sales continues that trend.
Leading indicators highlight the tug of war between the declining industrial/consumer sectors and the feverish rush to add liquidity to the system.
The decline of months' supply of housing is an unequivocal good sign, one I pointed to previously as the first sign of any turn in the housing market.
Later this week we will get new home sales.
excuse me while I sound like a shit head
But I don't see it all being good and yes I know people's home values are dropping like a stone.
the reason I do not is housing prices are so out of alignment with the median wage in the U.S. Houses are still unaffordable for most Americans and on that front something has to give.
I don't want to see unaffordable housing prices and think the idea of housing as an investment, as something to trade on Wall Street like baseball cards is fundamentally wrong...
because this is a primary need, shelter.
Yes, I know the housing bubble is a root cause but unregulated derivatives still are not being talked about, CDOs, CDSs and so on.
Not a shithead at all!
It's painful. The choice is, how quickly do you get to the bottom and begin to rebound.
Housing needs to revert to its historical multiple of income. A great deal of the reversion has taken place, but there will probably be overshoot on the downside as well (and it's not like incomes are notably rising, either).
I'll post something more in depth after the New Home Sales and GDP residential data arrive at the end of the week.
And I also agree that the (still!)unregulated derivatives need to be addressed.
graph request
would be prices as percentage of income, disposable income. If we have a deflationary spiral going on we know (and we are seeing this, remaining employees are being cut to 20 hours so they have their income cut in half but are not counted in the unemployment stats) wages will drop even further.
The reason I said shit head is we know the house has been touted as the huge, largest family investment, value of wealth and so many use home equity to take out loans (hey, more debt awesome!).
Here's a link:
http://themessthatgreenspanmade.blogspot.com/2009/01/existing-home-price...
I don't think I've seen a graph that compares with disposable income. I'll take a look later ... it might be possible to create one, but at the moment I have a lot of other graphs "on my plate" so to speak....
MTGM
You can also just link in his images and then give him a "hat tip" link, quote back to his blog to accredit him and drive some traffic his way too. that's a great post he wrote.