New Home Sales Rise, Media Baffled

Don't worry, there's always a but.

Sales of new homes rose in April for the first time in six months although the unexpected increase still left activity near the lowest level in 17 years.

The Commerce Department reported Tuesday that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units.

But the government revised March activity lower to show an even bigger drop of 11 percent to an annual rate of 509,000, which was the weakest pace for sales since April 1991. Economists believe that new home sales will remain weak for some time as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.

The Commerce report showed that the median price of a new home sold in April dropped to $246,100 in April, down 4.2 percent from April 2007.

A separate report showed home prices falling during the first three months of this year at the sharpest rate in two decades. The Standard & Poor's/Case-Shiller index fell 14.1 percent in the first quarter compared with a year earlier, the biggest year-over-year decline since the index began in 1988.

Don't worry though, folks, all will be well by next year, at which point the media will credit the halcyon days of the Obama administration.

Economists believe that home prices will remain under pressure until the sizable level of inventories is worked down to more manageable levels. Many analysts don't expect to see a rebound in prices until sometime next year.

Media Recoils at Good Economic News

Here's some economic data that should enrage the anti-U.S. mainstream media.

Inflation remains moderate in July

WASHINGTON (MarketWatch) -- Inflation remained cool while household incomes and spending strengthened in July, before market turmoil in August shook Wall Street and Fed policymakers, according to Commerce Department figures released Friday.

Inflation was milder than expected in July, with total inflation rising 0.1%, matching the 0.1% gain for core inflation excluding food and energy costs.

In the past year, the Federal Reserve's preferred measure of core inflation has risen 1.9%, just within the Fed's unofficial target zone of 1% to 2%.

Total consumer inflation (including all items) was 2.1% over the past year.

I would expect the Fed's to further ease the Fed Funds rate via open market operations to expand the money supply. Yes, there are real concerns out there about failed loans and the housing market, but it's not exactly "buddy can you spare a dime" time yet.

Incomes are still growing, although you don't want to read too much into monthly macroeconomic figures.

All told, the figures suggest that consumers were in generally good shape before the credit crunch in August sent financial markets reeling, forcing the Fed to conclude that risks of slower growth had risen substantially.

Expect a flurry of negative articles from the MSM predicting economic destruction to counter the actual real good news out there.

New Housing Data Shows Disparate Impact by Region

WASHINGTON (MarketWatch) -- Starts of new homes in the United States dropped by 2.1% to a seasonally adjusted annual pace of 1.47 million in May, the softest pace of groundbreaking since January, the Commerce Department estimated Tuesday.
Meanwhile, building permits rose 3% to a 1.50 million pace as authorizations for new apartment buildings and condo projects surged.

So you have a mixed bag with new home starts down but building permits up. So there is a shift to home fix ups and multi-family housing, plus likely some weather related impact to home starts. But most intersting to me is some regional data at the end of the article:

Regionally, May's starts jumped 16% in the Northeast and the Midwest, while they fell by 2% in the South and by 20% in the West.
As a result, building starts in the West are now down 38% compared with last May, the largest year-over-year decline in the region in 16 years.

Rarely do economic changes hit equally in all geographic regions. Here you can see where "the West", however that is defined in this article, is experiencing a significantly slower building economy than elsewhere. The northeast and midwest is going full speed ahead.