Today's report by Derek Kravitz at the Associated Press (also known to yours truly as the Administration's Press) covering the Census Bureau's December and full-year 2011 new-home sales release put a smiley-face on the "worst ever" year (the AP headline's term) in the category.
I like the adjective used at Sweetness & Light's related blog post to describe Kravitz's crud: "unfazed." The AP reporter follows four paragraphs of facts with three more paragraphs of sunshiny "analysis" which are so wholly unsupported by reality that you would fall off of your chair laughing if you didn't also realize that most readers, listeners and viewers who saw and heard this garbage today didn't know any better than to believe it:
New-home purchases fall, 2011 worst ever for sales
Fewer people bought new homes in December. The decline made 2011 the worst year for new -homes sales on records dating back nearly half a century.
The Commerce Department said Thursday new-home sales fell 2.2 percent last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy.
About 302,000 new homes were sold last year. That's less than the 323,000 sold in 2010, making last year's sales the worst on records dating back to 1963. And it coincides with a report last week that said 2011 was the weakest year for single-family home construction on record.
The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive in the depressed market.
Still, sales of new homes rose in the final quarter of 2011, supporting other signs of a slow turnaround that began at the end of the year. [1]
Sales of previously occupied homes rose in December for a third straight month. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year. And home construction picked up in the final quarter of last year. [2]
"Although this decline was unexpected, it does not change the story that housing has likely bottomed," said Jennifer H. Lee, senior economist at BMO Capital Markets. [3]
Notes:
[1] -- As seen here, actual sales of new homes rose from 66,000 during the fourth quarter last year to 68,000 during the most recent three months. We're supposed to be impressed? This would be like expecting a Major League Baseball team's fans to be happy because its players raised their total per-game run production from from 2.0 to 2.06 (the MLB average is about 4.5).
But wait, there's more. October 2011 sales were "better" than October 2010 (25,000 vs. 23,000). November 2011 was "better" than November 2010 (22,000 vs. 20,000). But December 2011 was 9% worse than December 2010 (21,000 vs. 23,000). In other words, even the paper-thin illusion of recovery went away in December, and the downward spiral resumed. Pending revisions, which could send the number even lower, December 2011 tied January 2011 for the second-worst single month on record -- the equivalent of an MLB team scoring less than 2 runs per game and seeing its slump deepen.
"Turnaround," schmurnaround.
[2] -- Existing-home sales are nice, but with the exception of home improvements, they don't represent much additional new economic output. The fact that people won't buy new homes even with rates at record lows demonstrates how awful the new-home market is. Homebuilder optimism is barely off the floor.
And I'm sorry, Derek, construction did not pick up in the final quarter of the year by anywhere resembling enough to matter. The two most convincing pieces of evidence which pretty much prove that things really got worse are the following:
- In its construction release last week, the Census Bureau told us that "An estimated 583,900 housing units were completed in 2011. This is 10.4 percent below the 2010 figure of 651,700."
- The number of single-family homes under construction at the end of the year, at 221,300, is the lowest level seen since such records began being kept in 1970, plummeting below December 2010, which at the time was the lowest on record, by over 10%.
"Pick up," schmick up.
[3] -- Ms. Lee's opinion is far from universally shared. On a local market-oriented radio program last night, Chris Farrell of MarketWatch.com opined that he believed we may be near the bottom but aren't necessarily there yet, and that the new-home market may stay at or near the bottom for several years.
"Bottomed," schmottomed.
Derek Kravitz shoved serious smoke up Americans' posteriors today.
It's going to be a long year for those of us who monitor these things.
Cross-posted at BizzyBlog.com.
