CNN and completely skewed objectivity
Tue Nov 29th, 2005 at 08:44:23 AM EDT :: News
Reading two different stories on the same topic left me spitting blood from bitting my tongue. Don't get me wrong this is just a matter of perspective, but why in the hell is CNN so caught up in turning the sour apples of this administration and turning them into a Peach Cobbler. I understand TimeWarner has a vested interest in keeping the economy strong but this is just ridiculous. I thought CNN and their ilk were beginning to get aboard with the truth, but this is just blatant now. Just read the headlines of the two stories. Their body may be close, but the tone of each story is apart in their goals and finish. Maybe I'm feeling a little conspiracy nut today, but am I reading these wrong? I guess the Reuters group has no vested interest in the Real Estate market or they would have put the same smile on this turd of a story. This only empahsizes the need for a seperate News entity above policy and economies. Deregulation will be the death of us all.
New home sales soar
Report shows unexpected jump to record high pace of 1.4 million; gain biggest in 12 years.
November 29, 2005: 10:40 AM EST
NEW YORK (CNNMoney.com) - New home sales posted a surprising jump to the highest on record in October, according to a government report Tuesday that bucked other recent readings suggesting that the white-hot housing market has been cooling.
New homes sold at an annual rate of 1.42 million in October, the Commerce Department said, up from a revised 1.26 million pace in September. The 13 percent increase was the biggest jump since April 1993.
Economists surveyed by Briefing.com had forecast that sales would slow to a 1.20 million rate.
The report follows earlier reports showing a drop in housing starts and building permits in October, as well as a bigger-than-expected decline in sales of existing homes and a drop in home builder confidence.
Most real estate economists had been saying that those readings all suggested the housing market had peaked and that rising mortgage rates were likely to slow sales from here.
The South, which got hit by major hurricanes in August and September, showed only a modest 1.9 percent rise in sales, while the West and Northeast both showed more than a 40 percent jump in sales. Only the Midwest, where sales were off 9.5 percent from September, showed any signs of slowing.
There was some signs of cooling in new home prices in the report.
The median price, which is the price at which half of new homes sell for more and half sold for less, rose just 1.6 percent from September to $231,300.
Meanwhile, the average price fell from September, suggesting that new homes at the upper end of the market had shown more softness than middle- and lower-priced homes. That's surprising given that the higher priced Northeast and West regions were the areas that showed the biggest bump in sales.
Perhaps more surprising, average prices slipped 1 percent from a year earlier while the median price rose just 1 percent over the same period, suggesting that builders are having to eat the increased costs of some building materials or are building smaller homes than in the past.
New home sales are a small part of the real estate market.
But they're also considered more of a leading indicator than sales of previously owned homes. New home sales are booked in the month that a sales contract is signed, while existing home sales are recorded when a sale is closed, typically a month or two after a contract is signed.
Mortgage rates have been rising, which raise the cost of financing and reduce the amount buyers can spend on a new home.
In October the average 30-year fixed rate mortgage was 6.07 percent, according to financing company Freddie Mac, up from 5.77 percent in September. October's average marked the first time it has been over 6 percent for a month since July 2004. Rates have since risen further, climbing to 6.33 percent in November, the highest since July 2002.
Rising rates can sometimes bring a rush of buyers into the market who hope to lock in rates before they rise any higher, so the spike in sales in October could represent that last-minute rush.
Now for Reuters
UPDATE 2-US existing home sales fall 2.7 percent in October
Mon Nov 28, 2005 12:29 PM ET
(Recasts, adds analyst reaction)
By Andrea Hopkins
WASHINGTON, Nov 28 (Reuters) - Sales of existing U.S. homes slowed in October and the inventory of unsold houses rose to the highest level in nearly 20 years, a trade group said on Monday in a report confirming the end of the nation's housing boom.
Sales of previously owned homes fell 2.7 percent from September's upwardly revised 7.29 million unit annual pace, and the drop would have been even larger if not for a surge in home-buying linked to Hurricane Katrina, the National Association of Realtors said.
"The housing sector has likely passed its peak ... and the boom is winding down to an expansion," NAR chief economist David Lereah said. "Many of our hot housing markets are transitioning from a sellers' market to a buyers' market."
The sales slowdown was sharper than anticipated by Wall Street. Analysts had expected overall sales to slow to a 7.17 million unit pace from the originally reported 7.28 million unit pace in September.
"The number just confirms the slowing growth trend that has been unfolding in the housing market, although the numbers are still at historically strong levels," said Ronald Simpson, managing director of global currency analysis at Action Economics.
Existing home sales would have been down 3.2 percent had it not been for strong buying in areas outside the zone hit hardest by Hurricane Katrina. For example, while sales in New Orleans fell 42 percent, sales in nearby Baton Rouge climbed 83 percent from September, the Realtors said.
Despite the slowdown in sales, prices increased 2.3 percent from September and were 16.6 percent higher than October 2004. This was the largest annual increase since July 1979 and a sign of what Lereah said is "continued strong demand" for housing.
The national median home price soared to $218,000, below August's $220,000 peak but still the second-highest price on record, the report showed.
John Lonski, chief economist at Moody's Investors Service, said prices remained on the "high side," a resilience that could help limit the economic cost of a cooldown in the nation's housing market.
"Despite the slippage in home sales there is no evidence of any nationwide softening of home prices, though it may be difficult to avoid some slippage in the price of residential real estate if only because a slower pace of home sales is likely for 2006," Lonski said.
The inventory of homes available for sale rose 3.5 percent from September to 2.87 million existing homes, the highest level since 3.04 million units in April 1986.
At the current sales pace, it would take 4.9 months to deplete inventories -- the highest in two years -- up from 4.6 months' supply in September.
Rising mortgage rates are a key factor behind the housing slowdown. According to data from mortgage finance company Freddie Mac cited by the Realtors, average 30-year fixed mortgage rates rose to 6.07 percent in October from 5.77 percent in September.
October's weakness in sales was nationwide, according to the Realtors' report. Home sales fell 7.4 percent in the Northeast, 1.9 percent in the Midwest, 1.8 percent in the South and 1.2 percent in the West.
Now you decide.
© : t r u t h o u t 2005
Bloomberg must not care
about the economy either, because this is their latest take on the housing market...
U.S. Existing Home Sales Fall More Than Forecast
Nov. 28 (Bloomberg)
By Carlos Torres
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
Rising mortgage rates and skyrocketing prices put home-buying out of reach for more Americans in October, a new report showed.
Sales of previously owned U.S. homes fell a greater-than- expected 2.7 percent last month to a 7.09 million annual rate, the slowest since March, the National Association of Realtors said today in Washington. The number of unsold homes was the highest since April 1986.
Housing affordability, already at a 14-year low last quarter, will continue to drop and deprive the economy of a source of strength in coming months, economists said. Today's report showed the median price rose about 17 percent over the past year to $218,000, the biggest jump in 26 years. The average 30-year fixed mortgage rate exceeded 6 percent in October and has kept rising since then.
"The peak in home sales activity is behind us," said Richard DeKaser, chief economist at National City Corp. in Cleveland. "So far, it's a gentle trek down." Housing ``will present a drag for the economy," DeKaser said.
Existing home sales fell from September's 7.29 million annual rate. Economists surveyed by Bloomberg News forecast home resales would fall to a 7.2 million annual pace from September's previously reported 7.28 million pace, according the median of 54 estimates. The pace reached a record 7.35 million in June.
Effect on Economy
The housing industry accounts for only about 5 percent of the U.S. economy and yet generated half of the growth in this year's first six months and more than half of the private jobs added since 2001, Merrill Lynch & Co. said in an August report.
Resales, which account for about 85 percent of the residential real estate market, are tabulated at contract closings and reflect buying decisions made a month or two earlier. New-home sales are counted when a contract is signed, making them a better gauge of current activity, economists said.
The report on new home purchases is due tomorrow from the Commerce Department. Sales are forecast to fall to a 1.2 million annual pace, from 1.222 million in September, according to the median estimate of economists surveyed by Bloomberg News.
Homebuilder shares fell today. A Standard & Poor's index of 16 builders including Centex Corp. and D.R. Horton Inc. dropped 29.5 points, or 3.2 percent, as of 2:35 p.m. in New York.
Sales of previously owned homes would have been even weaker last month had it not been for gains the areas of Baton Rouge, Louisiana, and Houston, reflecting demand from people displaced by Hurricane Katrina. The Realtors group said sales would have declined 3.2 percent in October to a 7.06 million pace excluding sales in response to the hurricane.
``The housing sector has likely passed its peak," said David Lereah, chief economist at the National Association of Realtors, during a press conference. ``The boom is winding down to an expansion. Housing activity is still healthy."
The median price rose to $218,000 last month from $187,000 in October 2004, the Realtors' group said. The year-over-year increase was the biggest since July 1979. The median price was $213,000 in September.
Sales of single-family homes fell 2.5 percent to a 6.23 million annual pace in October. Sales of condos and co-ops fell 4.4 percent to an 862,000 annual pace.
``The evidence keeps piling up that the housing market is slowing moderately," said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, Minnesota, in an interview. ``We certainly think housing will weigh on GDP growth next year."
Supply of Homes
Sales were lower in all four regions. They dropped 7.4 percent in the Northeast to a 1.12 million-unit pace, 1.9 percent in the Midwest to a rate of 1.58 million units, 1.8 percent in the South to 2.76 million units, and 1.2 percent in the West to 1.64 million units.
The supply of homes available for sale, another gauge of housing demand, rose to 2.87 million in October from 2.77 million. Supply represented 4.9 months' worth at the current sales pace, up from 4.6 months' worth the previous month.
The rate on a 30-year fixed mortgage averaged 6.07 percent in October, the highest monthly average since June 2004, from 5.77 percent a month earlier, according to Freddie Mac, the No. 2 purchaser of home loans behind Fannie Mae. The rate reached a two-year high of 6.37 percent two weeks ago.
Rising rates and higher prices caused the Realtors' group affordability index to drop to 117.8 in the third quarter, the lowest since the third quarter of 1991. Still, figures greater than 100 suggest households have the income needed to purchase a property at the median home price.
Outlook for Growth
``The housing market had remained robust, although a slowing in house price gains in some areas and recent declines in home equity lending at banks could be indicating that the long-expected cooling in the housing market was near," Federal Reserve policy makers said in the minutes of their Nov. 1 meeting released last week.
A more pronounced slowing in housing than most economists expect could be the catalyst for the central bank to lower their interest rate target in early 2007, according to economists at Goldman, Sachs & Co. in New York. The Fed targets the rate at which banks lend money to each other overnight, also called the federal funds rate.
A slowdown in housing could slice as much as 1.5 percentage points from economic growth in the next couple of years, according to a Nov. 18 report by Goldman Sachs economists Jan Hatzius and Monica Fuentes. ``This would probably be enough to persuade Fed officials to cut their federal funds target" in 2007, said Hatzius and Fuentes.
The risks to the economy posed by the housing market aren't lost on Ben Bernanke, the White House nominee to succeed Alan Greenspan as Fed chairman.
A slowdown in housing prices that isn't ``too sharp," ``should be consistent with the modest cooling of growth that many forecasters expect over the next year or so," Bernanke said last week in written responses to questions posed by Senator Jim Bunning, the lone Banking Committee member to vote against his nomination. A sharper slowdown, which he said is less likely, ``would have a larger effect on the growth of real output."
``It's not the beginning of the end as we see it," said Joel Rassman, chief financial officer of Toll Brothers Inc., the largest U.S. builder of luxury homes, in a Nov. 14 interview. ``Most of our markets are strong. They're just not as strong as last year."
Earlier this month Toll lowered its forecast of the number of homes it will sell in fiscal 2006 to 9,500 to 10,200, from the 10,200 to 10,600 it projected on Aug. 25.
To contact the report on this story:
Carlos Torres in Washington at email@example.com