This week, existing home sales were up 10% year over year. However, prices declined 7.1 percent in the same time period.
Any ”’alleged’ green shoots were found in the quarter over quarter price declines of only 3.8% – boasting the smallest decline since Q1 of 2008. New home sales, meanwhile, were up 5.1% from a year ago with prices dipping a modest .05%.
Yet the demand has been driven almost entirely by the government’s first time home-buyer $8000 tax credit, and the Fed’s purchase of 1.25 trillion dollars of bonds backed by home loans – not from any real improvement in sustainable macro-metrics.
It is an odd government policy that spends billions of dollars stimulating demand where there isn’t a viable multiplier effect to benefit the over-all economy. To say nothing of our perennially accommodative FED, in its purchase of trillions of dollars in bonds to protect the balance sheets of financial institutions and GSO’s – after spending the last 14 months jeopardizing billions of dollars purchasing toxic assets from financial institutions to shore up balance sheets.
Meanwhile, the crisis in unemployment, increased foresclosure activity and the portentous spike in prime loan defaults brings into question the entire Keynesian economic paradigm scheme. In hindsight, could differently targeted recipients of government largess have reaped greater economic rewards and a more robust trajectory toward a sustainable economic recovery?
Existing Home Sales
From S&P Indices:
New York, November 24, 2009 – Data through September 2009, released today by Standard & Poor’s
for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the
U.S. National Home Price Index improved in the third quarter of 2009, posting its second consecutive
quarterly increase and further improvement in its annual rate of return.”
New Home Sales 11/25/09
From The Associated Press:
WASHINGTON — Sales of new homes rose more than expected last month to the highest level in more than a year as the housing market shows stability after its historic collapse.
The Commerce Department says sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000.
Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to existing homeowners. Nevertheless, sales were up 5.1 percent from a year ago, the first yearly increase since November 2005.
The median sales price of $212,200 was off 0.5 percent from $213,200 a year earlier, but up 0.7 percent from September’s level of $210,700. ”