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Uh oh: New home sales collapse

When the federal tax incentives for new home purchases dried up, so did the sales. They plummeted by 33%:

Sales of new homes collapsed last month, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer get government incentives.

The Commerce Department says new home sales fell in May from a month earlier to a seasonally adjusted annual sales pace of 300,000. That was the slowest sales pace on records dating back to 1963.

The 33% figure is just the average. According to Market Watch, sales in the West fell by a whopping 50%. That's not just a contraction; that's an outright crash. Housing values will fall even further as a result. If home owners think they're under water now, they haven't seen anything yet.


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Comments (17)

Let me guess: the MSM will ... (Below threshold)
hermie:

Let me guess: the MSM will state that this drop was 'unexpected'.

It's amazing to me how the ... (Below threshold)
Cindermutha:

It's amazing to me how the MSM finds the end of an incentive to buy a home results in less homes sold is "unexpected."

Let me answer for Lee: "New... (Below threshold)
Drago:

Let me answer for Lee: "New home sales statistics are racist!!!"

Oh my gosh! Does anything g... (Below threshold)
914:

Oh my gosh! Does anything good come from Barry? Yes, November.

Next Barry will let the Bus... (Below threshold)
John S:

Next Barry will let the Bush tax cuts expire. That's an income tax increase for everyone in the middle class that still has a job (or has collected unemployment). Then a carbon tax on the air we exhale. And carbon credits that the crooks at Goldman Sachs will manipulate, so that we pay $10 gallon for gasoline and $2,000 month for electricity. The U.S. should be absolutely unliveable by 2012 unless we can stop this idiot in November.

Wow! Just like "Cash for C... (Below threshold)
GarandFan:

Wow! Just like "Cash for Clunkers". Who'd a thought this would happen?

Can I blame this on Barry? ... (Below threshold)
914:

Can I blame this on Barry?

"sinking 33 percent to the lowest level on record"

Are we talking the housing market or Barrys approval numbers?

As GarandFan notes @ #6 abo... (Below threshold)
Jim Addison:

As GarandFan notes @ #6 above, this is exactly like the clunker deal - all it did was move up purchases planned for the near future a few months, enough to suck on the Obama free money teat, then the ensuing months see lowered demand because the sales which would have been made now were moved up.

The incentives didn't create demand, they just rearranged it.

Seems Obama-Reid-Pelosi forgot to repeal the laws of economics while they were remaking the world, eh?

Well, I guess the "V-shaped... (Below threshold)
Tsar Nicholas II:

Well, I guess the "V-shaped recovery" touted by Obama & Co. didn't actually materialize in real life. Who'd have thunk it...

...or maybe people are waki... (Below threshold)
hyperbolist:

...or maybe people are waking up to realize that home ownership is not some moral necessity? That being mobile--especially in a tepid economy--is not compatible with having a mortgage? That you can actually have a much higher quality of life living in a--gasp!--city and--shudder!--not owning a vehicle?

Tying economic health to new housing starts or the rate of home purchases is stupid. If it turns out that people are better off renting, then lower rates of home ownership will be a good thing. The amount of your economy that was devoted to building homes prior to the present economic cluster-frig was totally unsustainable.

Tying economic ... (Below threshold)
Jay Guevara:

Tying economic health to new housing starts or the rate of home purchases is stupid.

We defer to your familiarity with stupidity.

If it turns out that people are better off renting, then lower rates of home ownership will be a good thing.

Good point. And if it turns out that the unemployed can't afford groceries, then lower rates of obesity will be a good thing. That Barry is a genius!

Jay Guevara, in what bizarr... (Below threshold)
hyperbolist:

Jay Guevara, in what bizarro universe is someone better off owning a home and car and having little disposable income, vs. living in a vibrant urban centre and having money to spend on interesting things in interesting places?

Go blow your paycheck on Funions at Wal-Mart.

And in what bizarro univers... (Below threshold)
Jay Guevara:

And in what bizarro universe is someone better off being obese?

It's good people are broke. Then they can't afford so much food. It's for the children! Thanks, Dems!

living in a vib... (Below threshold)
Jay Guevara:

living in a vibrant urban centre and having money to spend on interesting things in interesting places?

Good point. I've got the slogan for the PR campaign: "Every city a Detroit!" (Or in your case, perhaps I should have said "Bradford.")

Sleep under a bridge in your very own vibrant urban center, lulled to sleep by the sounds of gunfire, screams, and police sirens. Spend what your disposable income on interesting things - say, crack, weapons, whores, and bail - in interesting places - say, crackhouses and magistrate's courts. Ah, urban life - can't beat it!

Where do people come off thinking that they should have a say in how they live? Their betters have already decided that for them. Vote Democrat/Labour for the good life! Life is so much better when you don't have the standing to make those pesky decisions for yourself.

Look at the lucky people in Cuba and North Korea. Now they've got it good. They can't even remember the last time anyone gave a shit what they thought about anything, much less made their own decisions. Good times, good times.

Seriously, though, you don'... (Below threshold)
Jay Guevara:

Seriously, though, you don't get it.

Living in a vibrant urban center and having money to spend on interesting things in interesting places is what you want.

Not everyone wants that. Yet you think that people should be happy to be forced to live the way you want to live, regardless of how they may want to live.

Suppose Sarah Palin were elected and she required you to go to church every Sunday, to pledge allegiance to the US (I know you're not American, but let that pass), to kill and field dress your own moose, required everyone to qualify at the shooting range, and she closed all the bathhouses and thereby crippled your social life.

Cool, huh?

The point: everyone should have the right to make his own decisions (up to the point of imposing his will on others), and should be held responsible for his decisions.

I believe it's called "adulthood."

The really sad thing is tha... (Below threshold)
hcddbz:

The really sad thing is that we had government programs to increase home ownership. These programs will increase taxes because who pays from them? The American taxpayer.

Homeownership or renting are both viable options it all depends on affordability. Your level of disposable income depends on your planing not if you rent or own.

The bad policy can affect someones disposable income.
If your take home pay is lowered by increases in payroll taxes, SS, Medicare/cade taxes and then higher energy cost and property taxes these all take away from a person disposable income. Energy cost means higher transportation cost if you drive or take public transit.
Then you have property taxes which have caused people on fixed income to lose their homes. In some areas of PA taxes have increased from 2K to 10K in 4 years.

Who the big bad person in all this government.
Then you have higher food cost because of ethanol mandates.

Jay, your government curren... (Below threshold)
hyperbolist:

Jay, your government currently enforces building policies that make cities worse and suburbs preferable. So it already demonstrates a preference for sprawl rather than sustainable urban development.

The quality of life in, say, Brooklyn is a lot higher than in the suburbs. If you can afford a house, it's a great place to raise a family. If you can't, it's a great place to rent an apartment or own a condo. Fine if that sounds awful to you, but the suburbs are awful to people like me, and yet I'm forced to subsidize your freeways and infrastructure. So please don't pretend that the government--ever since WW II, at least--hasn't subtly coerced people into living a suburban lifestyle, when in fact an urban lifestyle is, in many ways, better for certain people.




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