New Home Sales Plummet in February - Posted by RE_news_er

Posted by Ken-Orlando on March 28, 2006 at 06:29:43:

Thanks, Gene. I think that the Florida market is very similiar to yours. It was very hot several months ago and is in the process of cooling off. The majority of deals will not generate a positive cash flow if your exit strategy is to rent or lease option them.

New Home Sales Plummet in February - Posted by RE_news_er

Posted by RE_news_er on March 24, 2006 at 11:48:24:

New Home Sales Plummet in February
Mar 24 10:22 AM US/Eastern
AP Economics Writer


Sales of new homes plunged by the largest amount in nearly nine years in February while the median price of a new home dropped for the fourth straight month, providing fresh evidence that the nation’s once-booming housing market is cooling off.

The Commerce Department reported that sales of new single-family homes dropped by 10.5 percent last month to a seasonally adjusted annual sales pace of 1.08 million homes. It was the second straight monthly decline and was much bigger than the small 2 percent dip that Wall Street was expecting.

The drop in new home sales followed news Thursday that sales of previously owned homes actually rose by a stronger-than-expected 5.2 percent last month following five straight monthly declines. Analysts said the trend in both reports pointed to a slowing housing market after five record-setting years.

The slowdown in sales was putting pressure on prices. The median price of a new home sold last month dropped to $230,400, down by 1.6 percent from January and off 2.9 percent from February 2005. The median is the mid-point where half the homes sold for more and half for less.

In other economic news, orders to U.S. factories for big-ticket manufactured goods rose by 2.6 percent last month, the biggest gain since November, reflected a surge in demand for commercial aircraft. Outside of the volatile transportation sector, orders actually fell by 1.3 percent, but economists said the underlying trend for manufacturing remained strong.

The 10.5 percent drop in new home sales in February followed a 5.3 percent decline in January and was the biggest drop since a similar 10.5 percent fall in April 1997.

Sales of new homes have fallen in four of the past five months with the sales rate of 1.08 million units the slowest pace since May 2003.

While sales of both new and existing homes climbed to new all-time highs in 2005, the fifth consecutive annual records, analysts believe sales will decline this year as the housing boom slows under the impact of rising mortgage rates.

By sector of the country, sales fell by the largest amount last month in the West, a drop of 29.4 percent. Sales were also down in the South, dropping 6.4 percent. Sales rose in the Northeast by 12.7 percent while sales in the Midwest were up by 5.2 percent.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



Doesn’t Matter - Posted by pboone

Posted by pboone on March 24, 2006 at 21:35:43:

upswing or downturn a real investor makes money. The new “housing boom” investor need to be concerned

Re: Upturn in home sales - Posted by TNinvestor

Posted by TNinvestor on March 24, 2006 at 14:37:14:

March 24, 2006
Defying Trend, an Upturn in Home Sales
Sales of existing homes unexpectedly surged in February after falling for five months in a row, the National Association of Realtors reported yesterday, reflecting a lift related to unseasonably warm weather and signaling that the housing market is healthier than some experts had suggested.

Sales climbed 5.2 percent last month, to an annual pace of 6.91 million homes, after falling 8.9 percent in the previous five months. The nationwide median price ? the point at which half the homes sold for more and half for less ? climbed 10.6 percent from a year earlier, to $209,000.

The number of homes for sale, however, continued to climb, rising by 5.2 percent, to 3.03 million, which at the current pace of sales amounts to a 5.3-month supply of homes.

Analysts, who had expected sales to fall to a pace of 6.5 million, cautioned that the increase could not yet be considered a turning point. Several other real estate gauges, including mortgage applications, interest rates and pending home sales, have indicated that sales are slowing.

An unusually warm January appears to have played some role in the sharp increase in sales. Warmer weather allows more people to venture out, and sellers often use the opportunity to hold open houses. The association counts homes as sold at the closing, which typically happens one to two months after contracts are signed.

Sales jumped 19.2 percent in the Northeast, the biggest monthly increase ever recorded for the region, and 11.1 percent in the Midwest, the largest increase since 1992. Sales in the West climbed a more modest 5.1 percent, and they fell 2.5 percent in the South.

Some analysts say the surge in February could mean home sales will be softer later this spring. Since August, sales of existing homes have fallen 4.2 percent. Mortgage applications for home purchases have fallen by about 16 percent in the last 12 months, according to the Mortgage Bankers Association of America.

Home prices were higher than last year in all regions but were rising at a slower pace than they were last year, especially compared with the peak spring and summer months, when it was not unusual to see increases of 13 percent to 15 percent nationally.

Agents and analysts report that prices have dropped in some hot markets, and that appeared to be attracting some buyers who had been wary of local housing bubbles.

“Before, we had lots of people who were looking, but they said they weren’t going to buy because they said prices were going to go down,” said Chobee Hoy, an agent in Brookline, Mass., near Boston. “And now we find ourselves in a very healthy market where people are not only looking at properties but making offers.”

Others say they expect sales to remain strong in the coming months. “It was quiet, but the last few weeks have been brisk,” said Bob Moulton, a mortgage broker on Long Island.

Sales of condominiums and co-ops, which fell more than single-family home sales in the last few months, were up 8.8 percent in February, while sales of single-family homes were up 4.7 percent.

You can find an artical to support any view you have…The best antdote for negitivity is going out and making money in REI

Im very concerned - Posted by Gene

Posted by Gene on March 27, 2006 at 10:42:54:

I want/need to know what is happening out there. My choices will be diffrent in diffrent markets. If things are super hot, I would jump into a quick flip, where at the top of the market my exit is going to be much difrent. I make money in both up and down markets but that is because I keep in touch with what is happening.

Ignorance is not bliss.

New vs Existing - Posted by Wayne-NC

Posted by Wayne-NC on March 24, 2006 at 15:29:59:

Quite a difference. Kind of like comparing used car to new car sales. When the perceived economic conditions warrant it, which ones will have the largest % change?

Ying and Yang…which one is the right one! - Posted by yingyang

Posted by yingyang on March 24, 2006 at 14:49:34:


Re: Im very concerned - Posted by Ken-Orlando

Posted by Ken-Orlando on March 27, 2006 at 16:59:39:

So what is the best exit strategy when at the top of the market? What is the best strategy in a downturning market?

Re: Im very concerned - Posted by Gene

Posted by Gene on March 27, 2006 at 19:46:22:

I would only buy at the top of the market if…

1 - you are buying at such a discount, you can sell it discounted and can sell it well below market.

2 - the cashflow from rent is so good, it makes a great long term rental.

Overall the best thing to do is be carefull. It can hurt trying to catch a falling knife. It will be a lot easier in a couple years when the market bottoms out. (note: I mostly know about the markets in the West (CA, NV, AZ).