New Home Sales: November 2011

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for November showing a monthly increase with sales climbing 1.6% since October and 9.8% above the level seen in November of 2010 but remaining at an epically low level of 315K SAAR units.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 158K units, lowest level seen in in at least 47 years while the median number of months for sale going flat at 7.4.

The monthly supply remained declined to 6.0 months while the median selling price declined 2.5% and the average selling price declined 13.77% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

Hong Kong Bubble?: Hong Kong Residential Property Prices June 2011

Today, the University of Hong Kong released their Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in June, the price of residential properties increased 1.11% since May climbing 28.99% above the level seen in June 2010.



The “Hong Kong Island” index, “Kowloon” and “New Territories” sub-components also showed notable annual increases while the "Hong Kong Island" series indicated that prices declined slightly on the month still far outpacing the prior 1997 peak.



The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.

Springtime for Bonobos?!

Homebuilder stocks started to plunge in 2005, subprime lenders in late 2006 and on into 2007, banks and housing financed collapsed in 2008 and all along the way the traditional media had been littered with segments related to a looming turnaround in housing.

Even today, analysts routinely appear on cable TV calling bottoms to all things related to housing yet, we are currently trending through some of the weakest home sales and prices seen in a generation.

“Hope springs eternal” as they say…

But, here we are at another spring, the seventh in fact since things soured for housing, and we are still looking at housing to show us that things have turned around.

This must be some primal urge… like a pack of Bonobos waiting out a storm that has blow apart all their tree nests, we keep peeking around the corner to see if the furor is over.

I suppose this is just another indication of how fundamental housing is to an economy.

Without growth in housing, specifically increasing homeownership with stable and rising prices, an economy appears to be sluggish or even broken.

A healthy expansion in housing represents increasing living standards and a thriving population, a trend that is tantamount to an expansion jobs or real incomes.

With housing continuing on the rocks, it’s hard to feel truly confident.

But could this spring mark the turnaround like the pundits suggest? Could we be on the verge of a breakout in housing?! Is housing exciting again?!!

While early indications from Radar Logic show that prices appear to have hit a seasonal low at the end of February and with the spring surge of transactions will likely rise through the March-June reporting periods, we are still far from anything that could even remotely be considered a healthy housing sector.

Foreclosures are still mounting, 50% of all mortgages are underwater, there is an immense backlog of REOs and unsold new construction homes, and distress continues as an ever present function as supply and demand tips in favor of cautious, even indifferent buyers.

Make no mistake, the housing collapse was an epic disaster and will take many years to right.

In the meantime, we will likely see scattered periods of strength and weakness as the market churns through and clears the destruction against a backdrop of the numerous other notable macroeconomic factors.

Reading Rates: MBA Application Survey – March 30 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage increased 12 basis point to 4.92% since last week while the purchase application volume declined 1.7% and the refinance application volume declined a notable 10.1% over the same period.

While rates have generally trending up for the last four months, it will take some time to determine if this trend will continue or if rates will begin to slide back down to the historically low levels seen in mid-2010.

In any event, the purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).