Stocks Rise As Housing Market Collapses

It's a good thing stocks are rising, or I would have thought the economy was collapsing!

Dow Posts 200 Point Gain on More Dreadful News

Economic Headlines Weak for Nov 23, 2015

Boy! It's a good thing stocks are up today! This economic news would have told us we are in a recession otherwise!

 National Activity contracted for the 3rd month in a row according to The Chicago Fed's index. Printing -0.04 (missing expectations of +0.05 for the 9th time of the last 11 months), CFNAI has now been below 0 (contraction) for 8 months this year. Under the surface the biggest problem is the collapse in the sales-to-inventories index to cycle lows (contracting 7 of the last 8 months).

US Manufacturing PMI has re-collapsed to 25 month lows as manufacturing employment showed "one of the smallest monthly gains seen over the past five years."

Dominated by an 8.7% collapse in The West, existing home sales fell 3.4% in October MoM (worse than the 2.7% drop expected) to a 5.36mm SAAR.

Real Estate Pending Home Sales Collapse 5.5%

A 5 am head fake "rumor ramp" in Europe, was followed by this:

Pending home sales fell 5.5 percent in April, reversing a 3.8 percent gain logged in March, new data out of the National Association of Realtors shows.

The NAR also revised last month's gain 30 basis points lower, from an earlier estimate of a 4.1 percent increase.

Good News, Bad News Meltup

Stocks have broken out to a new rally, leaving behind the bad news of the past few weeks. This morning, consumer spending increased unexpectedly (but only due to back-to-school shopping -- what's so "unexpected" about that?), which has sent stocks rallying even beyond the overnight meltup. Now, however, more bad economic news has emerged. Pending home sales dropped 1.3% in July, and the Dallas Fed survey has showed continued contraction of economic activity. However, over the past few days, Wall St has once again begun ignoring the bad economic news, claiming that its all "priced in", and the economic contraction is being shrugged off once more. If the jobs report this Friday is a poor one, we will see another sharp correction in stocks. Let's hope its a good one, in which case we will see this rally fueled.

from Zero Hedge:
The second economic disappointment of the day comes from the Dallas Fed, which dropped from -2.0 to -11.4 on expectations of -9.0- this was the 4th consecutive negative print month. The report was, in a word, horrible, with just 2 of the 15 constituent indices posting an increase, and the bulk solidly in the red, led by Unfilled and New Orders which dropped 16.8 and 11.2, respectively: not good for economic growth. On the employment side there was nothing good either, with both employment and hours worked declining by -6.7 and -10.1, respectively.

More Bad News

But stocks are rallying now!

from Zero Hedge:

And so the double dip confirmation resumes, with the Richmond Fed printing at -10, the lowest since June 2009, well below consensus of -5, a collapse from June's -1, and the lowest since June 2009. From the report: "In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July's reading of -1. Among the index's components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1." And more: "Other indicators also suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25. Additionally, the delivery times index moved down twelve points to end at -4, while our gauges for inventories were virtually unchanged in August. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19." And the final nail in the economic coffin was New Home Sales which came at 298K, down from 312K upward revised prior, and missing the consensus of 310k: the lowest in 5 months. "Housing data over the past three months indicates that there is little appetite in the consumer sector to take on the risk of purchasing a home at a time when prices are likely to decline further,’’ says Bloomberg economist Joseph Brusuelas. As Bank Of America (RIP) said yesterday, one false word out of Beranke on Friday, and we will see what could possibly be the most epic market crash ever. For those wondering why stocks surged on this horrible news: look no further than the central planners in the Marriner Eccles building who are now expected to do "the right thing" for stocks.

Existing Home Sales Miss, Cancellations Rise

from Zero Hedge:

According to the NAR, June existing home sales once again declined, this time to 4.77MM from 4.81MM, the lowest since November, and well below the expected rise to 4.90MM. This number was 8.8% below June 2010's 5.23MM. Total inventory increased by 3.3% to 3.77 million units, or 9.5 months of supply at the current sales rate up from 9.1 in May. The biggest question mark is the surge in order cancellations which soared from 4% in May to an unprecedented 16% in June. That's one in five home transactions being cancelled in the middle of the deal.

From Bad to Worse: New Home Sales Collapse in February, Stocks Sink

WASHINGTON (MarketWatch) — Sales of new single-family homes collapsed in February, the Commerce Department reported Wednesday, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill.

New-home sales fell 16.9% to a seasonally adjusted annual rate of 250,000 in February, though January’s figures were revised higher to 301,000 from 284,000. Compared to February 2010, sales collapsed by 28%.
Every region but the West saw record lows, and in the Northeast, sales dropped by 50% compared to year-earlier levels.
Economists polled by MarketWatch had expected a slight rise to a 290,000 rate in February. January’s sales were hurt in part by abnormally bad weather and the expiration of a California tax credit.

The new-home sales release is notoriously volatile, and the margin of error is plus or minus 19.1%. The less-volatile three-month average to February was 295,000, compared to 307,000 in January.
Demand for new homes is weak, constrained by still-high unemployment, a slow-growing economy, but most of all the remnants of the house-price bubble, with many owners unable to move due to being underwater on their mortgage.
Furthermore, it’s now far cheaper to buy an existing home due to the glut of foreclosed properties on the market.
The median price of a new home in February was $202,100, a dive of 13.9%, which is the largest one-month percentage drop on record. Even so, the median existing-home price was $156,100 in February. In Dec. 2007, the first month of the Great Recession, the gap between the price of new and existing homes was far narrower, when a new home fetched $227,700 and a lived-in home cost $207,100.
At the current sales rate, there are supply of 8.9 months, the highest backlog since the 9.1 months in August 2010.

WASHINGTON (TheStreet) -- Sales of newly built homes plunged 16.9% in February to a seasonally adjusted annual rate of 250,000, the Commerce Department said Wednesday, a far bigger jump than expected and the worst rate on record since 1962. 
February's rate of home resales remained 24.8% below the cyclical peak of 6.49 million units in November 2009, which was the initial deadline for the first-time homebuyer tax credit, and 2.8% below the home resale rate in February 2010.

New Home Sales Decline to Lowest Level in 47 Years

WASHINGTON (AP) -- Buyers purchased the fewest number of new homes last year on records going back 47 years.
Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.

Case Shiller Amplifies Calls of Double Dip in Housing

NEW YORK, Jan. 25, 2011 /PRNewswire/ -- Data through November 2010, released today by Standard & Poor's for its S&P/Case-Shiller(1) Home Price Indices, the leading measure of U.S. home prices, show a deceleration in the annual growth rates in 17 of the 20 MSAs and the 10- and 20-City Composites compared to what was reported for October 2010.  The 10-City Composite was down 0.4% and the 20-City Composite fell 1.6% from their November 2009 levels. Home prices fell in 19 of 20 MSAs and both Composites in November from their October levels. In November, only four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year gains. The Composite indices remain above their spring 2009 lows; however, eight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have fallen even further than the lows set in the spring of 2009.
In November 2010, the 10-City and 20-City Composites recorded annual returns of -0.4% and -1.6%, respectively. November was the sixth consecutive month where the annual growth rates moderated from their prior month's pace.  Since May 2010, the housing market has experienced an unambiguous deceleration in home price returns. The 10-City Composite has reentered negative territory with a -0.4% annual growth rate in November, versus the +5.4% reported six months prior in May, and the 20-City Composite was down 1.6% in November versus its +4.6% May print.
"With these numbers more analysts will be calling for a double-dip in home prices. Let's take a moment to define a double-dip as seeing the 10- and 20-City Composites set new post-peak lows. The series are now only 4.8% and 3.3% above their April 2009 lows, suggesting that a double-dip could be confirmed before Spring. Certainly eight cities setting new lows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in home prices," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "With an annual growth rate of +3.5% in November, Washington DC was the strongest market, but still well below the +7.7% annual rate of growth seen in May 2010. The only city with a gain in November was San Diego, up a scant 0.1%. While San Diego, Los Angeles and San Francisco are still ahead from November 2009, their annual rates are shrinking in recent months.
"Looking at the monthly statistics, 19 of 20 MSAs and both Composites were down in November over October. Fourteen MSAs and both composites have posted at least four consecutive months of decline with November's report. Thirteen of the MSAs and the 20-City Composite fell by 1.0% or more in November. While not always consecutive months, 13 of the MSAs and both composites have posted at least seven months of decline since the beginning of 2010. These markets saw home prices fall more than half the months reported in 2010 so far."
As of November 2010, average home prices across the United States are back to the levels where they were in latter half of 2003. Measured from June/July 2006 through November 2010, the peak-to-current decline for both the 10-City Composite and 20-City Composite is -30.3%. The improvements from their April 2009 trough are +4.8% and +3.3%, respectively.

Existing Home Sales Hit Lowest of Recession

WASHINGTON (AP) - The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.
High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.
"We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's in New York.
The National Association of Realtors reported Thursday that sales dropped 4.8 percent to 4.91 million units in 2010. That was slightly fewer than in 2008, which had been the weakest year since 1997.
The poor year for sales did end on a stronger note. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units in December, the best sales pace since May and the 12.8 percent rise from November was the biggest one-month surge in 11 years.
Gains in mortgage rates may have spurred some fence-sitters to buy homes in December before rates moved higher, analysts noted.
The increase was an encouraging sign after a dismal year for home sales, said Mark Zandi, chief economist at Moody's Analytics. But he cautioned against raising expectations for a rapid recovery in housing.
"The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes," he said.
Zandi said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year.
Home sales will benefit from an improved hiring market. Many economists predict employers will double the number of jobs added this year compared with 2010. A reason for more optimism is a decline in the number of people applying for unemployment benefits over the past four months.
Last week, applications fell to a seasonally adjusted 404,000, the Labor Department said. That followed a spike in applications in the previous week, which is typical after the holidays end and employers let temporary workers go. Even with the holiday bump and this past week's decline, the latest figures were only slightly higher than the 391,000 level reached last month - the lowest in more than two years.
Fewer than 425,000 people applying for benefits is considered a signal of modest job growth. Economists say applications must fall consistently to 375,000 or fewer to substantially reduce the unemployment rate.
Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover until the glut of foreclosed homes is cleared.
Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.
Foreclosures or distressed sales such as short sales - when lenders let homeowners sell for less than they owe on their mortgages - are forcing home prices down in many markets. That has made it difficult for some potential buyers looking to upgrade, because they would have to accept less money to sell their current home.
Even historically low mortgage rates have done little to boost the sales.
The average rate on a 30-year fixed mortgage rose to 4.74 percent this week, Freddie Mac said Thursday. That's up from a 40-year low of 4.17 percent in November. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent last week. That's nearly half a point higher than the 3.57 percent rate in November - a 20-year low.
For December, sales rose in all parts of the country, with the strongest gain a 16.7 percent increase in the West. Sales rose 13 percent in the Northeast, 10.1 percent in the South and 11 percent in the Midwest.
The median price for a home sold in December was $168,800, down 1 percent from a year ago.

Pending Home Sales Drop 1.8%

from Fox Business:

Home Prices Begin Double Dip

CNBC reported that home prices slipped 6% in the past two months.

It gets worse: Gary Shilling is predicting an additional 20% drop in housing prices. That means that homeowner mortgages that are underwater will nearly double from 23% to 40%! More housing misery to come!

CNBC's Take On Pending Home Sales' Record Decline

Contracts for pending sales of previously owned U.S. homes fell to a record low in June as buyers sat on the sidelines, a survey from the National Association of Realtors showed on Tuesday.
The Realtors said its Pending Home Sales Index, based on contracts signed in June, fell to a record low 75.7 from a revised 77.7 in May. Economists polled by Reuters had expected a rise of 0.6 percent.

"We really need to see stronger job creation to have a meaningful recovery in the housing markets," said NAR chief economist Lawrence Yun, adding "there could be a couple of additional months of slow home-sales activity before picking up later in the year" if the job market improves.

The June decline followed a 30 percent drop in May after a popular tax credit expired at the end of April.

The index was 18.6 percent lower than in June 2009 and fell in three of four regions compared to the prior month. 

Contracts rose 3.7 percent in the South, the country's largest region, but dropped by 0.2 percent in the West, by 12.2 percent in the Northeast and by 9.5 percent in the Midwest.