Friday 28 December 2012

The US economy

Consumer Confidence Plunges, Unadjusted New Homes Sales Slide To Lowest Since February

27 December, 2012

Just as we saw with UMich, it appears the hope for change is wearing thin among the people. Today's Consumer Confidence data missed by its biggest margin in 7 months, dropped below the year's average, and saw the largest 2-month drop in over 15 months. All age cohorts lost confidence with the eldest most and it appears those earning over $35k are also beginning to worry (as those between $35k and $15k seem more confident). Over 40% expect stock prices to decline and it is expectations that have plummeted from a hope-filled 80.9 to a 13-month low of 66.5.

In other news, we got the November New Homes Sales report from the Census Bureau. On the surface the number was good, if a slight miss to expectations of 380K, printing at 377K, up from 361K in October, and "the highest in years." As we said on the surface. Because like the Initial Claims data earlier, where we subsequently learned that the DOL had to estimate the claims data of 19 states (!) as their labor offices were closed for the holiday, it is digging into the data that reveals the reality once more. Sure enough, on an unadjusted, unannualized basis, November saw a tiny 27K houses sold, of which just 2K in the northeast, and 3K in the Midwest. Furthermore, of these 27K actual new home sales, which by the way was the lowest number of home sales since February 2012, 9K were homes still under construction, and 8K were not even started, with just 10k homes completed and now sold. Digging further, on page 3 we found the dreaded (Z) designator in the $750,000 and over category, meaning that a negligible (taken to mean under 500 but usually implying 0) homes were sold in the $750,000 and higher price range. In fact, the only thing that really did soar was the number of homes for sale at the end of the period which rose to 151K: the highest since November of 2011. Yet magically the median month for sale since completion dropped to a tiny 5.3 months, down from 7.2 a year ago. It's a miracle what a few million mortgages in the "foreclosure stuffing" pathway will do to shadow and real inventory.

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