Monday, March 26, 2007

"Probably rebounded" - NOT!

This is hilarious! Bloomberg reported yesterday (via Housing Doom, emphasis by me):

Sales of New Homes Rebounded in February: U.S. Economy Preview

By Vince Golle

March 25 (Bloomberg) -- Sales of new homes in the U.S. probably rebounded last month from a three-year low, a sign the worst of the real estate rout has passed.

Purchases rose to an annual pace of 990,000, up 5.7 percent from January, according to the median estimate of economists surveyed by Bloomberg News ahead of a Commerce Department report tomorrow. The National Association of Realtors last week said sales of previously owned homes rose by the most in three years. ...

The housing market is "fairly well along in the process of rebalancing," said Richard DeKaser, chief economist at National City Corp. in Cleveland. Subprime-mortgage defaults don't "have the heft to bring the entire market down."

Economists say that while the biggest declines in residential construction have already occurred, the housing will continue to restrain economic growth for at least the first half of the year.

OOPS. So much for "probably rebounded". Bloomberg today:

U.S. Economy: Home Sales Drop to Lowest Level Since June 2000

By Joe Richter

March 26 (Bloomberg) -- New-home sales in the U.S. unexpectedly fell in February to the lowest level in almost seven years, dimming prospects for a quick revival in housing.

The supply of unsold homes climbed to the highest in 16 years, the Commerce Department said in Washington today. Purchases dropped 3.9 percent to an annual pace of 848,000 last month. Economists had forecast they would rise to a 985,000 rate, based on the median forecast in a Bloomberg News survey. ...

"We're probably not going to see the pickup in housing by the end of the year that we were looking for," said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. "Housing imbalances will take longer to correct because inventories aren't declining very fast."

The report points to more declines in home construction that will further weigh on the economy as a wave of mortgage foreclosures adds to the woes of builders including KB Home. The February pace of new-home sales was the slowest since June 2000.

"As ugly as these numbers are, they don't reflect the tightening of lending standards, which means sales are going to get worse," said Christopher Low, chief economist at FTN Financial in New York. "The longer it takes for housing to recover, the more the risk it could spill over to other parts of the economy." ...

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