Sales of new homes have tanked
One economist crunches the numbers and says that pricey new homes simply aren't moving.
The answer is zero -- for the second month in a row. At least, according to David Rosenberg, chief economist at investment firm Gluskin Sheff.
That figure seems hard to believe, but keep in mind that Rosenberg is talking about new homes, not existing ones. If he's right, that's a shocking statistic. For the housing market, trauma has set in, he says.
Things are unbelievably horrific in housing now, Rosenberg writes (as reported by Zero Hedge). Home sales have undercut recession lows by double digits, he writes, even though mortgage rates are at historic lows and there are at least eight government programs to encourage home buying.
It's hard not to feel outright panic after reading Rosenberg's report. Nearly 1 in four American homeowners are upside-down on their mortgage, and 5 million homeowners are in foreclosure or seriously delinquent, he writes.
There are 4 million homes on the market. The average price of a new home is down to $235,300 -- a low last seen in 2003. Expect prices to slide further.
"If the truth be told, if we are talking about reversing all the bubble appreciation that began a decade ago, then we are talking about another 15% downside from here," he writes. "The excess inventory data alone tell us that this has a realistic chance of occurring."
Luxury-home sales have simply crashed. Across the country, only 1,000 new homes above the $500,000 mark sold last month, Rosenberg writes. In fact, more than 80% of all new homes sold were under $300,000.
"Just another sign of how this remains a full-fledged buyers’ market," he adds.
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