They say every silver lining has a dark cloud, and that’s certainly true with today’s report from the Census Bureau that sales of new single-family homes rose 4.8% in September from August.
The markets liked the news at least at first, with the Standard & Poor’s 500 Homebuilding Index jumping 3%. But then reality set in and the index drifted back down. Here’s why:
—These monthly numbers jump around a lot so you can’t put much faith in any single data point.
—The level of sales in September was actually lower than the initially reported level for August. It was only higher than the revised August number.
—The September number, too, is likely to get revised downward, since that’s been the recent pattern.
—Global Insight says that the Census estimate for sales in the West, namely a gigantic increase from 162,000 in August to 223,000 in September, is “not believable.” Not unbelievable in the sense of “wow,” but unbelievable in the sense of … wrong. Remember that the Realtors just reported a 10% monthly decline of existing home sales in the West, which makes more sense considering the terrible state of the mortgage market there.
So back in the trenches, everybody, and put those helmets back on. The bombardment isn’t over.
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.