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Steven Hansen
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Steven Hansen is an international business and industrial consultant specializing in turning around troubled business units; consults to governments to optimize process flows; and provides economic indicator analysis based on unadjusted data and process limitations.
My company:
Econintersect LLC
My blog:
Global Economic Intersect
  • Realtors Believe Home Sales Revival Coming Soon 2 comments
    Apr 26, 2014 1:06 PM

    Lawrence Yun, chief economist at the National Association of Realtors believes:

    .... that current sales activity is underperforming by historical standards. There really should be stronger levels of home sales given our population growth. In contrast, price growth is rising faster than historical norms because of inventory shortages.

    .... With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly.

    Unfortunately there is no hard evidence which supports rising home sales is just around the corner. Just take a look at this analysis and consider the trends:

    Econintersect Analysis:

    • Sales growth decelerated 1.3% month-over-month, down 8.5% year-over-year - sales growth rate trend is decelerating using the 3 month moving average.
    • Prices growth decelerated 1.3% month-over-month, Up 5.9% year-over-year - price growth rate trend is decelerating marginally using the 3 month moving average.
    • The homes for sale inventory grew marginally this month, but is historically low for Marchs (but higher than inventory levels one year ago).

    NAR reported:

    • Sales down 0.2% month-over-month, down 7.5% year-over-year.
    • Prices up 7.9% year-over-year
    • The market expected annualized sales volumes of 4.45 to 4.90 million (consensus 4.56) vs the 4.59 million reported.

    November 2013 ended 28 straight months of improving year-over-year home sales volumes (unadjusted data) - and the data this month continued the data deterioration.

    Unadjusted Year-over-Year Change in Existing Home Sales Volumes (blue line) - 3 Month Rolling Average (red line)

    /images/z existing1.PNG

    The graph below presents unadjusted home sales volumes.

    Unadjusted Monthly Home Sales Volumes

    (click to enlarge)

    Look again at the above graphic for the month of Marchs - deceleration of volumes continues. I don't believe anyone has a good understanding of the dynamics which are causing poor home sales. My guesses are that this is a perfect storm of many dynamics which are just bad:

    • too much student loans effecting too many potential buyers lowering their credit rating;
    • the fire sale of foreclosures has been reduced so there are fewer and fewer "deals";
    • house values are not increasing fast enough for flippers;
    • consumer sentiment seems to have shifted away from the "American dream'.

    Please toss in your reasons - but my feelings are these four are all accelerating to the downside, and it will take several more years until these elements stop working against rising home sales.

    Other Economic News this Week:

    The Econintersect Economic Index for April 2014 is again showing an extremely slight growth deceleration - but a growing economy nonetheless. There are a growing number of soft data points we watch outside of our index which bears watching. The economy remains too strong to recess, and too weak to grow.

    The ECRI WLI growth index value has been weakly in positive territory for many months - but now in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

    Current ECRI WLI Growth Index

    /images/z weekly_indexes.PNG

    Initial unemployment claims went from 304,000 (reported last week) to 329,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate. The real gauge - the 4 week moving average - marginally improved from 312,000 (reported last week as 312,000) to 316,750. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line)

    (click to enlarge)

    /images/z unemployment.PNG

    Bankruptcies this Week: Genco Shipping & Trading (MPM), Furniture Brands International

    [click here] to view all the economic and financial analysis this week on

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Comments (2)
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  • bbro
    , contributor
    Comments (11240) | Send Message
    The ratio of existing home inventory to total nonfarm payroll employment is 1.44%.....well below the 2% warning level for excessive inventory...
    26 Apr 2014, 03:31 PM Reply Like
  • Michael Clark
    , contributor
    Comments (12024) | Send Message
    Strangest title. I really don't think the most powerful image of your article is what Lawrence Yun believes, whom we all understand is the original "Good Ship Lollypop" "Put A Smile on That Face" Yes-Man of housing.


    Nice article. I believe that the housing bubble sank the global economy. And continues to sink it. We need housing prices cut in half, not protected by illegitimate low rates. I took a trip out of Hanoi this past week into the country west, Mai Chau. Upon returning the driver explained that all the million units of housing 'under construction' on the west edge of the city were unfinished and frozen, not to be finished, because of the lack of money to finish them. There are no buyers. This is what happens when interest rates are kept too low for too long. You give free money to the speculators who spend it wildly (it is so easy to spend other people's money).
    27 Apr 2014, 07:04 AM Reply Like
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