NEW HOME SALES: SLOWEST MARCH ON RECORD, SURPRISED?

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EDITOR’S NOTE: One developer is actually giving away a car if you buy the house and it still isn’t it working. Surprised? How can anyone even expect new housing to recover when there isn’t any need for new houses? The “new house” myth is the same as the “free house” myth — it isn’t true. There is no market for new houses, there is no market for houses to speak of because nobody can sell their old house. And with the destruction of the financial system and real property market resulting in high unemployment and decreasing median earnings for the last 35 years, what exactly would you expect a buyer of a new house to use for money to pay of a house, new or old?

Our current status quo is diminishing the purchasing power of nearly all people in the country for the benefit of a couple of hundred of the richest. If you want to sell a 1500 square foot house, you are going to have to come up with a good sales pitch to someone who now lives in 35,000 square foot mansion on 16 acres.

With most people abandoning their falsely foreclosed homes without a fight, and thus contributing to the problem because they are actually still the owner of those properties, the table is tilting further and further toward the tipping point. What will happen then?

New-Home Sales Increased in March, but Stayed Low

By DAVID STREITFELD

The market for new homes is so depressed that even a rebound last month did not keep it from being the slowest March on record.

Buyers signed contracts in March at a seasonally adjusted annual rate of 300,000, an 11 percent increase from the month before but down from 384,000 in March 2010, the Census Bureau said Monday.

In March 2005, when a lack of income or savings was no deterrent to getting a dream home with granite countertops and a walk-in pantry, families and investors flocked to new homes at an annual rate of 1.43 million houses.

The millions of homes built during the boom have created a drag on the current market as the owners surrender them to foreclosure. Builders cannot compete against relatively new construction offered by banks for large discounts.

The March sales numbers modestly exceeded analysts’ expectations but nevertheless did not impress. “Still miserable,” concluded Joshua Shapiro, chief United States economist for MFR Inc. While February sales were revised up to 270,000 from an initial 250,000, it was still the lowest of any month since records were first kept in 1963.

Builders told potential buyers in March that they might want to make a deal before new rates came from the Federal Housing Administration, which guarantees many loans. That probably contributed to the rebound.

In a separate report issued Monday, the HousingPulse Tracking Survey indicated that nearly half of the housing market is distressed properties. Because banks generally pulled back on foreclosures over the last six months, the survey underlined the long-term pressures facing the market.

If the banks start processing foreclosures faster, that will create further downward momentum on the housing market. A coalition of state attorneys general and the Obama administration is negotiating with the lenders to persuade them to do more loan modifications instead.

Home prices have been falling for the last six months, and the release on Tuesday of the Standard & Poor’s Case-Shiller Home Price Index for February is expected to show another decline. Before that release, Morgan Stanley lowered its forecast for prices by an additional 4 percent. Morgan Stanley analysts now say prices will drop 6 percent to 11 percent from their levels at the end of last year.

The drop in home construction and sales is in some ways good news for would-be sellers, because it means new supply is not coming to a market that already has excess inventory. But lackluster construction is a drag on the larger economy, contributing to high unemployment and weak consumer spending.

It would take about seven months to find buyers for all the new homes now on sale, a period only slightly longer than normal. Builders are clearly skittish about anything for which they do not have a contract.

No relief is in sight.

“Sales remain very low by historical standards and, considering that a number of home builders reported large drops in orders recently, there is likely more weakness ahead,” wrote Jennifer Lee, senior economist at BMO Capital Markets.

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