More proof housing is headed for a fall
Dismal market can't be blamed on weather
In my recent article published online by HousingWire citing a news release put out by the National Association of Home Builders touting the “good news” that a slim majority of home builders felt confident about the new home market, I countered with information that should have given these folks pause.
I also questioned on what indicators these home builders were basing their new-found enthusiasm.
With the joint release on July 24 of the U.S. Census Bureau and Department of Housing and Urban Development estimates for new home sales in June coming in at 11.5% below the June 2013 estimate, and with new home sales coming in June reported at 20% below most analysts’ estimates, as pointed out today in HousingWire by Trey Garrison “New home sales collapse, erasing recent surge,” that pause should be significantly magnified.
As Mr. Garrison also pointed out in his piece today, HousingWire earlier addressed this being the year that “housing failed to launch.” There are far too many indicators that prove they were prescient to write about here.
And to be sure, dismal housing and economic data cannot be blamed on the “weather.” And never should have been, at least not as “the” reason.
With respect to unemployment, as Brena Swanson pointed out in her HousingWire article, also of July 24, “Jobless claims drop to 8-year low – But it’s not all positive,” jobless claims dropped by 19,000 filings for the week ended July 19, the lowest for initial claims since Feb. 18, 2006. This sounds impressive, but only on the surface.
Ms. Swanson quoted Linsey Piegza, chief economist with Sterne Agee as saying, “Despite the impressive outsized decline in weekly claims this morning, the U.S. labor market remains under pressure.”
The “pressure” alluded to is the fact that the positive news stated above along with job creation gaining momentum, surpassing 200k for the past several months, neither of these improvements, as noted by Ms. Piegza in Swanson’s piece, “has translated in wage pressures.”
This is due to the fact that so very many of these jobs being created are part-time or lower-wage jobs. This will have little if any positive impact on new or existing home sales.
With over 7 million Americans working in part-time positions rather than the full-time jobs they would prefer having, and with so many millions more dropping out of the workforce altogether, the case is made… again, that our economic outlook is not rosy as we sloth through the remainder of 2014.
Recently, economists at the GSEs said that the U.S. economy is expected to grow by only 3% over the second half of this year.
This certainly does little to offset the dull growth numbers of the first two quarters and since the government continues to adjust economic output numbers down following their initial quarterly reports, the final economic data for 2014 could potentially end up indicating negative growth.
It is not always a wonderful thing to receive validation that one’s views are correct. But validation abounds for my observations.
The main reason I continue to write about the “reality” of the housing market and how it impacts the general economic outlook in America is because of the responsibility industry veterans and observers such as myself have to set the record straight about what is taking place.
While “good news” is always preferable to the opposite of that, in order for readers to make up their own minds about what is going on they need to hear opinions from multiple perspectives.
I certainly don’t enjoy writing negative articles. After all, as a motivational speaker as well as a housing industry veteran of more than three decades I am an optimist by nature. That does not change my responsibility.
When the housing outlook improves, I can assure you that I will change my tune, but I will never spin information nor betray my responsibility.