I failed to comment yesterday on the huge miss by economists on consensus new home sales, but Rosenberg has some nice comments today in Breakfast with Dave.How Many is Zero?The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer � zero, nada, rien; and for the second month in a row. Only 1,000 units priced above 500,000 moved last month. That�s it! Over 80% of the homes that the builders managed to sell were priced for under $300,000. Just another sign of how this remains a full-fledged buyers� market � at least for the ones that can either afford to put down a downpayment or are creditworthy enough to secure a mortgage loan (keeping in mind that 25% of the household sector does have a sub-600 FICO score).
There are a couple of issues here.
1. New home sales are recorded at contract signing. So recent closings at a higher rate do not count. Nor do existing home sales. Many of those complaining were looking at closing data or existing home sales.
2. The other factor is rounding error. Rosenberg should not have been so emphatic.
From the Census Bureau New Home Sales Spreadsheet
Table 2 - $750K home sold
"(Z) Less than 500 units or less than 0.5 percent."
Anyone targeting Rosenberg's statement is making a mountain out of a molehill.
Let me put it this way "There was a statistically irrelevant number of new home sales above $750K, somewhere between zero and 500".
This is not worth the amount of attention it has received.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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