So How Weak Are Housing Sales?

Posted by: Peter Coy on June 13, 2006

John Burns Real Estate Consulting in Irvine, Calif., says new home sales are worse than the Census Bureau says. Here’s an excerpt from the company’s newsletter, which came out today:

Relying on data without understanding the methodology can lead to wrong conclusions. For example, the Census Bureau is reporting that new home sales are only down 6% from one year ago, which we know is incorrect. For accurate new home sales estimates, see the press releases of publicly traded home builders – all of whom are reporting sales (orders) that are down 20% - 40% from one year ago. The NAHB Housing Market Index, as well as almost every industry source we contact each month, supports the fact that sales are down 20%+ from one year ago in more than 70% of the markets we track (Texas, the Carolinas, Georgia and New Mexico are some of the major exceptions).

Reader Comments

Nick

June 13, 2006 5:15 PM

It seems the media has done a tremendous diservice by only reporting a few months ago about a cooling market. I understand wanting to avoid panic but people selling their homes are not aware of the real market condition and are stomped their favorite agents aren't selling.

Kudos on you reporting this at last. We have seen this for the last 10 months!

mel

June 17, 2006 6:05 PM

What do you mean that sellers' aren't aware that the market is tanking??? It's been all over the news since October. Does it have to be featured on a reality TV show for people to notice??

R. A. Feiler

June 19, 2006 10:29 PM

David Lereah, National Association of Realtors, chief Economist, has been projecting on the Positive side of a strong market for the past 8 months....I think he caught that DOT. COM. DISEASE, "Irrational Exhuberance" from all those Players in the Pseudo stock market a few years back...In the Florida Panhandel, for the First five months of the year, all Real Estate Sales, New & ReSales in condos, single family and lots are off 66%. and it is going lower the next six months.... If that isn't a Bubble Burst, David doesn't know crap,,,, try Flying a Balloon half full of air..Of course Malcom Berko says an Economist only has to be right 50% of the time to draw a paycheck.....I guess he still gets a paycheck for preaching like a Timeshare Sales Mangager at the daily sales meetings...

Gary Anderson

June 20, 2006 1:04 PM

David Lereah is an admitted condo investor. He has a personal interest in keeping the real estate market going. The internet has made it possible for market efficiency to work, bringing us a quick learning curve showing that fundamental housing values are no longer with us. This learning curve has made people correctly fear that we are at the top of the markets in many areas and that it is not time to be suckered in to an expensive house at this time. Lereah and the NAR that he represents was predicting a soft landing until the fed continued to raise rates, and is continuing to go beyond what the RE industry is comfortable with. Inflation is real, and the fed must do what it has to do. In many places there will be no soft landing, and there could be serious financial problems for many regarding their re loans. This could impact retail sales as well. The time is now to save money, get out of debt, and put off the idea of getting rich with real estate.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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