New-home sales plunge to a near-two-year low as housing picture deteriorates

[mahatmakanejeeves]

Source: MarketWatch

New-home sales plunge to a near-two-year low as housing picture deteriorates

Published: Oct 24, 2018 10:52 a.m. ET

Year-to-date sales are just 3.5% higher than in the same period last year.

By ANDREA RIQUIER

This article is corrected to reflect that sales are at the lowest in nearly two years.

The numbers: New-home sales ran at a seasonally adjusted annual rate of 553,000 in September, the Commerce Department said Wednesday. (1)

Sales of newly-constructed homes swooned to the lowest since December 2016. September's selling pace of 553,000 was 5.5% lower than in August, and 13.2% lower than a year ago.

What happened: Sales badly missed the MarketWatch consensus forecast of a 620,000 pace, and revisions to prior months were all downward.

The median selling price in September was $320,000, 3.5% lower than a year ago. At the current pace of sales, it would take 7.1 months to exhaust available supply, a 6-year high.
....

(1) https://www.census.gov/construction/nrs/pdf/newressales.pdf

Read more: https://www.marketwatch.com/story/new-home-sales-plunge-to-a-near-three-year-low-as-housing-picture-deteriorates-2018-10-24

[duforsure]

1. Housing tanking now, and more to come

After the trump slump gets wound up and going good. Auto's are the next to suffer , and then when everyone finds out car prices are $5-8K more expensive people will be pissed. Its coming all from the policies and tariffs trump and the gop are behind, so when the markets crash , and the value of the dollar drops 30-40% they will have nobody but themselves to blame. Is putin behind all this to get his revenge on us with now? trumps doing everything he wants him to do? Sure looks like it. People are also expecting huge refunds on their taxes this year, but wait till they find out, he lied to them about it all. People are finding out they'll see nothing extra and many will have to pay more.

[bucolic_frolic]

2. Slip-sliding away

No one is paying attention to the deterioration of the economy. Auto sales plunged in September. Auto stocks are yielding 4-5% and in my view signaling recession. It's 2008 all over again if the slide continues.

[turbinetree]

3. Hey orange shit for brains, and the republicans that gave out those tax cuts..................

do you think that just maybe ......................your 1.6 trillion tax cut has something to do with this................because after all the middle class and poor did not reap any benefits from the cuts to generate any money to help with the housing market...................or to buy any other items to keep the economy going........................and do you think that just a maybe ......your hero's tariffs had something to do with this fiasco in the making....................and then there is Paul "ayn rand" Ryan........................to be added to the mix, of this happy horseshit............and now wall street is whining.......... .......................and now your going to blame the poor and middle calls for this shit..............I got a house I want to sell......................and it's white outside....................

[pimpbot]

4. Lumber prices were way up

But have dropped dramatically in the last couple months. Interesting to see the selling price of a home has dropped as well, meaning less profit for the builder, since there is a price lag between wholesale and end user.

Lumber prices:
https://blog.forest2market.com/north-american-softwood-lumber-prices-continue-to-drop

[GatoGordo]

13. I'm a home builder, and I'm busy.

Some materials prices are up. Some are lower. My lumber prices are stable.

The higher costs I am incurring are labor. I hire subs to finish drywall, paint, electrical, plumbing, HVAC and exterior work. They are having a hell of a time finding labor, especially in the climate I employ in (Minnesota). Our statewide unemployment is at 2.8%. Its even lower in my county.

As far as homes, every market is different. A few counties around mine (Dakota, Goodhue) are all busy with building. The rest (Mower, Dodge, Fillmore) are struggling.

[NickB79]

23. So you're the culprit!

I live in Dakota county, and it seems like everywhere I look there's more farmland being gobbled up by new construction. It's crazy how many houses are going up, and how expensive they are.

[GatoGordo]

25. Yes, one of the many culprits!

I've been quite busy. Though I haven't done any work in Dakota. Mostly Olmsted and the areas close in to Rochester.

I know that the Lakeville area is being built up like crazy.

As far as expensive... that isn't something that can really be controlled. Its supply and demand. Especially labor. I could hire another crew easily to build more homes. The problem is finding the crews. And it is especially troubling that fewer and fewer young people are getting into the trades. Electricians, plumbers, pipe fitters/HVAC, carpenters... everyone is fighting each other for good workers. When I started in the business, (early 1980's) employees went BEGGING to be hired.

[ProfessorGAC]

14. Interest Rates Are Rising Too

Since nearly everybody buys on house on credit, the rising interest rate scare some folks away, as well. So, materials go up, interest goes up, and people quit thinking about that new bigger home. Then the people who are ready for a first home have nothing available and the builders don't want to build little places. (The value/material & building costs ratio goes down, and the contractors and developers don't want margins to slip)

The spiral continues until new housing starts drop to the level that people start getting laid off.

An economy that is only good for the top 1% is only good for a while. Without middle class consumption, nobody benefits, even with tax cuts they never needed.

[UrbanProspector]

5. I thought the economy was

doing fabulous, the best it's ever been even. I thought we hired the best people, DOW Jones booming...?
Whenever I see Dolt45 sPouting in public, he always says the economy is so good, maybe for has-been reality-tv stars and their corrupt families. The rest of us know better and many more will learn pain soon I fear.

[Achilleaze]

6. #TrumpSlump

republicans have pissed on America's nests, and everything else. Sad.

[Guppy]

7. selling my rental

closing in 7 days. I am getting out while the getting is good. I give the economy 6 months.

[The Liberal Lion]

8. I have a contract on my investment property, closing in a week

putting my primary property on the market today. I've been planning to leave the country the day trump was elected. This is the last step. Wish me luck

[Guppy]

12. Make sure it is staged correctly.

I sold my primary in April. I painted the entire inside. Both bathrooms were done. All new carpet and staged correctly. we got 99%v of our asking price.

The rental was a bigger task. new bathrooms, new kitchen, new wood floor in kitchen, new appliances, island installed, quartz countertops, resanded all wood floors. new ceilings(was spackle)We spent $35,000 and made $70,000. Both sold in 3 days. We got list price on the second house.
4 other houses were listed before ours and ours sold first.

[Mosby]

15. the rental market is doing great in my area.

If you sold in three days you underpriced your property.

[Guppy]

16. no we didn't

We were not sure the first one was going to appraise. Wells Fargo ended up appraising it for the exact price we got.It was iffy. We got the highest price ever at the time in our neighborhood.

The second one was right on target. The comps were right were we were at. My wife used to be a realtor. We checked the comps. The houses that were 4 bedrooms and a basement were listing at $15,000 more than mine. We had a 3 bedroom no basement. We were a ranch which is highly desirable. The worst thing that you can do is not get appraised enough.

[GatoGordo]

19. That is not necessarily true. A house will sell for what its worth.

If you under-price a home, there will be a bidding war. Providing of course that the market hasn't imploded.

I just sold a flip. Bought a 2BR, 2BA townhome and upgraded it with new flooring, paint, some electrical upgrades and counter tops. About $15k and 2 weeks of sweat equity into it. I was expecting to get a $25,000 profit on the flip and to my surprise I "under-priced" it and ended up with a $40,000 profit.

In one day. In a hot market, you don't have to wait a month for the right price. It finds you. And in real estate, time is money.

Underpriced? Not at all. It sold for what someone was willing to pay for it. Everyone came out a winner.

[mahatmakanejeeves]

9. Ten years ago today:

Crash of 2008–2009
....

On October 24, many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices. In the US, the DJIA fell 3.6%, i.e. not as much as other markets. Instead, both the US dollar and Japanese yen soared against other major currencies, particularly the British pound and Canadian dollar, as world investors sought safe havens. Later that day, the deputy governor of the Bank of England, Charles Bean, suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history."

[groundloop]

10. Deja-vu all over again....

This same scenario played out at the start of the Bush recession (does anybody even remember that far back) .... And fuck me - Tiny's recession couldn't be happening at a worse time for me, I'm planning to retire in the near future.

[Wellstone ruled]

11. All the signs were out there in May.

My Spouse just said,your hunch was right. Bloomberg Eourpe had a Fund Manager on in May that forecast this major October crash based on the Tax Cuts and over stimulation of Markets that are functioning at one hundred per cent a the present time.

BTW,Janet Yellen said in the same time frame,that the influx of this new money will cause Inflation of certain Stocks and a cause Interest Rates to rise disproportionately to real market vales.

[Power 2 the People]

17. The Dow Jones was at 19,827 the day Dump took over as President.

We need it to fall below that before the orange asshole runs for re-election. Hard to sell a declining market even to the rubes who believed he was a competent businessman.

[Lucky Luciano]

20. I won't root for the economy to have a recession for political purposes. nt

[Power 2 the People]

21. We must agree to disagree. I will gladly sacrifice money and profit to save our Democracy.

If that's what it takes to wrestle our government back from this lunatic and the billionaires who fund the Republicans I'm all in. Let it go to zero if it has to. When a Democrat gets back in office we will rebuild the economy like we always do.

[obamanut2012]

24. Not everyone is as privileged as you to be able to "sacrifice money and profit"

We can both want him to be gone NOW, and not want our country to implode and its citizens to suffer any more than they are.

[tymorial]

27. I have the future of my family, my 2 year old.

Not to mention aging parents and a 87 yo grandmother. I cant go along with a crash for political opportunity.

[Bengus81]

29. Seriously?? Glad you mention Billionaires,they can weather a DOW that drops 10,000 points

So can multi millionaires. People like me who retired in April 2017 get the brunt of a disaster like this. And no...a tanking DOW doesn't make the racist hate mongers that vote for Trump suddenly want a Dem in the White House.

[MarvinGardens]

18. As an economy, we need to get to a place

where housing prices can decline modestly without causing panic. And where housing prices do not appreciate at obscene rates, nor do homeowners expect them to. I bought my house in 2014. Now, prices in my neighborhood are so high, that if I were looking today, I would have to look elsewhere. For what I am paying on my mortgage for a 4 bedroom home, I could today rent... a 2 bedroom apartment in a non gated complex. Prices are outrageous and need to come down.

[tymorial]

28. This.

My wife and I finally bought a home but it took us nearly a decade and we had to move 40 miles away from my wife's work in order to afford something. We are just over thr boarder in Rhode Island and my wife works in Boston. We could never afford a house in Mass. This same home 2 miles away over the boarder would cost 40 to 50k more. It's really crazy. Where we were living before, it would be priced at 500 to 600. This is a 30 year old Cape. It's a nice house but certainly no mansion

[TexasBushwhacker]

31. When families with median incomes

have no hope of buying median priced homes, something has to give.

[tymorial]

32. Yup

It may be different elsewhere but up here in the Northeast (outside of the rural areas away from cities) the only people in the middle class were able to purchase homes have either been saving for 10 to 20 years or already own a home and have equity. But even then you need cash on hand for closing and expenses unless you plan on financing everything including closing costs.

As it was we still had to borrow money from family and take a loan against retirement. We were renting a house before. The landlord was a nice guy and he never raised our rent which was pretty reasonable for what we had. Still we werent building equity and though the landlord always fixed everything, he wasnt putting money into any improvements, even paint. I looked into downsizing to a smaller or two or three bedroom apartment but the price wouldn't have been that much of a difference when you consider we would have also have had to rent a storage unit for everything that wouldnt fit.

So we bit the bullet, drained our savings, took the loan and borrowed the rest. The house is nice and we have a good sized yard. We are near family and my daughter sees her memere and pepere every day. Sure the house needs work and we have a lot to payback but it was worth it just for my daughter. My only wish is that the traffic wouldn't be so horrible for my wife. Door to door it is only 40 miles between the house and her office but sometimes it can take an hour and a half to two hours one way.

[workinclasszero]

22. #Trumpslump

Like Bush Jr destroyed Bill Clinton's good economy, Trump will destroy Obama's.


Stock market lost all gains for the year. Massive recession on the way no doubt and inflation from Shitler's trade wars.

[Freddie]

26. New construction is starting up again around here

Back in the mid-90s to mid-00s new home developments were popping up everywhere (we bought one in 98) and then it virtually stopped. Now there’s a few developments again but they’re priced a lot higher than comparable existing homes.

[Bengus81]

30. IMO it's because Banks don't want to loan money for homes at low rates.....

If the rate on new homes was 10% they probably make you fill out a form with 4-5 lines on it and stamp it approved a minute later. Your right about the late 90's,I subbed for one developer here that was building and selling 200-250 mid sized homes per year.

By 2006 or so they had 90 homes setting that they were thinking about renting out. The Company survived the Bush disaster but builds very few homes today.

[GatoGordo]

34. Banks are willing to loan at low rates. You just have to have awesome credit.

Locally, banks are lending to "higher risk" borrowers again, but only because the Federal government is guaranteeing the loans (here we go again)

I'm not sure what the answer is. Banks will lend if they think the loan will be repaid. Otherwise, they want a huge down payment and higher rates to offset the risk.

[GatoGordo]

33. Some markets are depressed. Others are booming.

Where I live, the market is booming. 25 minutes away, a small town can't give away its lots. (Claremont, MN)

https://www.postbulletin.com/news/local/can-t-find-a-house-in-rochester-how-about-claremont/article_b7a1213d-0ecb-535d-88f0-ab2a355d4a4f.html

Real estate is all about location and amenities. Old people like smaller, single level living with minimal maintenance. Young couples with families want multi level living with large yards. Young single adults want to be close in to "the action". Where I lived, the building economy slowed somewhat, but it never collapsed. I'm a builder and I never went without work. The same cannot be said for less urban areas further out from the core.