Wednesday, February 24, 2010

If the so-called expert economists are this far off, who can we rely on for reliable estimates?

Hmmmm, Economists estimated that sales of new single family homes would rise 3.8% in January. But, sales did not rise, they declined. And, at -11.2%, the decline was significant. So much for our so-called expert economists. (Where is my crystal ball?; I think I should loan it out.)

As reported in the Wall Street Journal today (February 24, 2010)......

U.S. New-Home Sales Drop 11.2%

WASHINGTON—U.S. new-home sales unexpectedly fell in January, setting a record low and erasing all gains made in the market during the past year as the economy recovers from recession.

Demand for single-family homes fell 11.2% from the previous month to a seasonally adjusted annual rate of 309,000, the Commerce Department said Wednesday.

Economists surveyed by Dow Jones Newswires had estimated sales would rise 3.8%, to 355,000.

It was the third drop in a row. Sales in December fell 3.9%, revised from an originally reported 7.6% decline. The new-home sales report is volatile because it is based on a particularly small sample. The government said it was 90% confident that the true change in new-home sales in January was between minus 25.2% and plus 2.8%.

The 11.2% decrease carried sales to their lowest level since records began in 1963. Sales fell below the level of 329,000 in January 2009 that analysts had considered the bottom for the market. Over the past year, sales had climbed, albeit slowly and unevenly, because of low prices, low mortgage rates, and tax incentives. But Wednesday's report wiped out the advance and showed, year over year, sales were 6.1% down from January 2009.

While the report Wednesday was depressing for the housing sector and cast serious doubt about the housing recovery, the government last week released data containing promise for future demand. It reported single-family home construction permits inched higher in January after two solid gains. The third straight increase suggested builders might be stocking up on permits in anticipation of demand from the extension of the home buyer's tax credit. The $8,000 incentive for first-time buyers was renewed through April.

Wednesday's new-home sales data showed inventories picking up slightly. There were an estimated 234,000 homes for sale at the end of January, up from 233,000 in December. The months' supply at the current sales rate rose, to 9.1 from 8 in December.

The median price for a new home fell, year over year, in January by 2.4%, to $203,500 from $208,600 in January 2009.

Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.

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