With the bulls desperate to keep pumping up the stock market, spin has been refined to a fine art. Even in the faintest of glimmers they can somehow plot a return to new heights.
If only it were so. . .
Yesterday's news on new homes sales is just the latest example of this madness. It's a world where the skies are not cloudy all day.
You see new home sales were actually down 21% over June 2008 — which was flat out horrible. But since sales rose 11% from May to June, the bottom in housing magically appeared.
And if you believe that one, I have a slightly used bridge to sell you.
From CNN Money by Les Christie, entitled: New home sales: ‘Really good news'
"Sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes," according to a report released Monday.
The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000, according to Breifing.com.
However, sales are still 21% below the levels of a year ago, when new homes sold in June at an annualized rate of 488,000, according to the report released by the U.S. Department of Housing and Urban Development. Four years ago, during the height of the housing boom, the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month. (emphasis mine)
Still, the report was very positive, according to Peter Morici, an economics professor at the University of Maryland who had forecast June sales to be at the 350,000 level. "That is really good news. Considering what's going on in existing home sales, with all the foreclosure activity sending down home prices, for new homes to jump like that is a good indicator that the economy is bottoming out."
The median price paid for a house sold in June 2009 was down about 3% to $206,200; the mean price was $276,900.
By the end of the month, the inventory of new homes had dropped to 281,000, an 8.8 month supply at current rates of sale. Last month, there were enough homes on the market to last 10.2 months at that rate.
"They have to clean out that stock to get building again," said Morici.
"Normal" new home inventory is about 300,000, according to Newport, which we're already below. But, he adds, the median time to sell a home is at an all-time high of 11.8 months.
"That tells you it's still very hard to sell a new home," he said.
The bottom in housing is nowhere in sight. . ..
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