Home foreclosures and delinquencies accelerating

In my previous postings I may have appeared a bit negative on future home prices and suspicious of the optimistic feelings exuded in the popular media regarding the housing market. Here's some reasons why.

Both graphs show functionally the same data but from different sources and slightly different methodologies. The coming flood of home foreclosures will further erode consumer wealth, bank balance sheets, home prices and consumer confidence. That's just some of the primary effects.

Graph #1 is from Paper Economy blog and shows loans on Fannie Mae's books that are seriously delinquent.

Graph #2 from Calculated Risk blog provides a slightly more granular look at similiar data from a different source, showing both mortgages delinquent and in foreclosure. I recommend you check both blog entries.

Look at the graphs and you will see the foreclosure crisis is getting worse, not better.

New Home Sales Followup

Following up my previous post on housing . . .

The WSJ came out with an article the next day with a fuller explanation of the good and bad news regarding Monday's new home sales 'rise'.

Compared to the blogosphere the WSJ was 24 hours too late. I bring this up because 24 hours to the markets is a looong time. Calculated Risk immediately presented the complete picture, good and bad news alike and continues to be an excellent source for the housing market.

While some blogs are complete drivel others are faster and superior to the popular media. Those superior blogs are one reason for the slow decline in the print and television media.

New Home Sales - Statistics Never Lie!

I don't forsee myself commenting too much on events well covered by other bloggers but the recent new home sales reporting deserved some piling on.

New home sales were up 11% or down 21.3% Excuse me? Is that really good news or really bad news?

Yahoo News had this to say:

New home sales in June posted the fastest increase in more than eight years as buyers took advantage of bargain prices, low interest rates and a federal tax credit for first-time homeowners

What was omitted by Yahoo: The home sales increase was on a month to month basis, and NOT on a year over year basis as it should be presented. Month to month (May 2009 versus June 2009) sales were up 11%. Year over year (June 2008 versus June 2009) sales were down 21.3% Like many other economic events, home sales show a strong seasonal tendency and to only tout monthly changes without showing year over year data does not provide a complete picture to the reader.

Calculated Risk provides an excellent blog entry and graph showing the sales during each month as well as year to year.

Fundmymutualfund has a slightly snarkier commentary:

I'm feeling faint.... the news is so overwhelmingly good. Even though sales surge EVERY year in the spring let me shoot this bunny out of a cannon in celebration because....
Sales have risen for three straight months. Now keep in mind this is with taxpayer handouts of $8000 to first time homebuyers, along with unnatural mortgage rates created at the expense of savers in this country via Uncle Ben's actions. More on this later. So the important question in a SEASONAL number is the year over year % change. Sales of new homes were down 21% versus June 2008.

At least the Wall Street Journal had the sense to put in the year over year numbers, but in the body of the article and not in the title?

The Big Picture is also all over this:
More Nar Nonsense

Commercial vs Residential Real Estate

New Home Sales Fall 21.3%

What is going to happen to all the good news reporting in the fall when it is very likely new home sales will fall on a month to month as well as yearly basis?

Disclosure: Short some housing stocks in personal and aggressive client accounts