For over a year I have shared with you on TownHall that the recovery was being hyped to help Obama. The purported housing recovery was based upon the manipulation of interest rates by the Fed, and inventory manipulation by the withholding of millions of foreclosures from the market, and not upon organic growth.
It is not possible for the economy to recover until housing recovers and neither can recover until the job market recovers. New home construction rising to 50% of healthy was being hailed as recovery. A pace of 5 million existing home sales (about 30% foreclosures) was being hailed as recovery when 6 million (3% foreclosure) was considered normal.
Without any organic growth in jobs, with 7 of 8 jobs created under Obama having been part time, the entire recovery talk was nothing but hopium. QE, and ZIRP are false foundations. Obama’s policies the wrecking ball. Fake now meets reality.
Excerpts from the left leaning BusinessInsider: Everyone’s Kinda Freaking Out About All the Ugly Housing Data……
The new home sales report for July was very weak, not only because of a 13.4% decline to 394k annual rate in July (cons 487k, UBSe 500k) but also because of downward revisions to the prior three months. June was revised to 455k from 497k; May was cut to 439k from 459k; and April was trimmed to 446k from 453k.
Home price measures certainly do not show soft demand. That said, this was an undeniably weak report and raises the possibility that higher mortgage rates are having a larger effect on sales than we anticipated.
Guggenheim Partner’s Scott Minerd:
…New home sales are booked when a contract is signed, a key difference from existing home sales, which are booked months later when the deal closes. As such, new home sales are the most current indicator of housing activity. This makes the recent collapse of new home sales exceptionally disturbing. All told, there has been a 20.7 percent decline in new home sales in June and July. We would view any other business that experienced a 20 percent decline in activity over a two month period as in a highly difficult position.
BlackRock’s Russ Koesterich points to another up-to-date high frequency housing market indicator: mortgage applications.