Wednesday, June 24, 2009

New Home Sales Fall Again: I Told You So

"Battered home builders in the U.S. got even more bad news Wednesday: new-home sales fell unexpectedly in May, showing the sector must continue searching for stability as it limps through the worst downturn in generations.

Single-family sales decreased 0.6% from the prior month to a seasonally adjusted annual rate of 342,000, the Commerce Department reported. That's below the 360,000 economists had expected.

Year-over-year, new-home sales were 32.8% lower than the level in May 2008.

"The numbers are not great; there's no question about it," said Leif Thomsen, chief executive of independent mortgage lender Mortgage Master."

Talk about underestatement! To read the rest of this article from CNN/Money go here.

There isn't going to be any quick fix to the U.S. residential real estate market anytime soon. I've been saying that for YEARS. I've been writing about it for MONTHS here. The problems are too deep, too many, and too grim for any minor fix (like Obama's $8,000 tax credit) to help.

By the way, new home starts are RISING at the same time new home sales are still falling---even with lower prices, extensive builder incentives, and ultra low cheap mortgage money.

Does it sound like the industry has learned its lessons yet?

Robert J. Abalos, Esq.