New Home Sales Report (Aug 23, 2012)

Wells Fargo released these two charts about new home sales and new home builder inventory for sale, as reported by the U.S. Commerce Department.

These charts help provide perspective on the 3.6% sales increase reported today.  The rise is encouraging, but it is important to keep in mind that after that rise, the level of new home sales is at the lowest level since 1989 (the earliest date in the chart).

On a more positive note, the builder inventory is at the lowest level in the same period.  That should continue to take pressure off of the builders.

Other Misc. Housing Data:

30-year mortgages are at 3.66% today, up from 3.62% last week.

15-year mortgages are at 2.89% today, up from 2.88% last week.

Last year 28% of home sales were to investors expecting to rent them, which distorts the picture of long-term demand.

Contingent Housing Risks:

If the concept of seizing underwater mortgages through eminent domain becomes a material reality, the mortgage market would likely be severely restricted from current levels — driving cash equity requirement way up, increased credit standards, and generally less money available.

Housing Market Demographics:

Josh Rogner was interviewed on Bloomberg today, and he reported there is a real bifurcation in attitudes and behavior towards home ownership.

Apparently the under 30-year old cohort is forming households at a reduced rate, and is less inclined to think of owning a home as an imperative; while the over 54-year old cohort is forming households at an increased rate and still views home ownership as an important goal.

With the two cohorts leaning in different directions, the future of housing is troubled.  Move up buyers on average can’t move up, unless someone lower in the housing food chain buys from them.

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