House buyers: We need at least further 20% correction

“Existing-home sales rose 2.4% to a seasonally adjusted annual rate of 4.77 million, the trade group said.”

Again emphasizing useless month-over-month numbers.
Here is the real number:
“Sales … are down 3.6% in the past year.”

“Similarly, first-time home buyers had accounted for about half of sales earlier, but only 29% in May. ”
Translation: the flood of the dumbest first-time home buyers lured by $8,000 bribe, who were dumb enough not to realize that price of their house will fall $8,000 the day the subsidy will end and they will be left to hold the bag, is drying up. Only “owners” are swapping their inflated mortgages not forgetting to pay 6% of the inflated numbers to REliars and some more in “closing costs” to banks and local taxing authorities.

Existing home sales (Seasonally Adjusted Annual Rates):

2006: 6,478,000
2007: 5,652,000
2008: 4,913,000
2009: 4,770,000

Sales are down 27% since 2006. Do you see the trend?

Also remember that most sales of homes are generated in the spring/summer months or the period of Mar-Sept. So far it does not look at all promising; spring is gone and we are already at the end of June.

Higher mortgage rates will trim any advances for June and the remaining of the summer.

Foreclosures rising more than home sales(both existing and New combined), which means more house in the market. More house in the market will reduce the price even down further. Home prices going down causes more unemployment, which in turn will cause even more home foreclosure..

Which just means its still a bad news and we are still in the worst recession

Bottomline: Home prices are still expensive, we need at least further 20% correction

Related Posts:

• The $8k tax credit pulled all the oxygen out of the room.
• From Bloomberg this a.m: “Unemployment Probably Topped 9% in May: U.S. Economy Preview
• The only “glimmer of hope” I see is one bank announced record profit.
• Reply to “bottoming in housing”
• I am old enough that I remember my grandfather’s words about his living through the Great Depression.

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