"Here Comes the Housing Double-Dip
The latest housing numbers clearly show this new dynamic playing out …
Existing home sales dropped 2.2 percent in May, compared with expectations for a gain of 6 percent. The supply of homes on the market actually rose slightly from year-ago levels to 3.89 million.
New home sales collapsed a whopping 32.7 percent in May to a seasonally adjusted annual rate of 300,000. That’s the lowest level in the history of data collection, which goes back to 1963. Prices slid almost 10 percent from a year earlier.
The National Association of Home Builders’ index, which tracks how builders perceive market conditions, tanked to 17 in June from 22 in May. That was much worse than the economists were expecting, and it was the sharpest drop in any month since November 2008.
Slumping housing demand is pushing lumber inventories higher and prices lower.
The Mortgage Bankers Association’s purchase loan application index just touched 167.80. That was down from 270.70 a year earlier and the worst reading since 1997.
Oh, and one of my favorite indicators — the price of lumber? It’s taking an Acapulco cliff dive! Lumber futures prices have plunged from $327 per 1,000 board feet in late April to around $180 now. Folks, that’s a 45 percent collapse in two months!
Bottom line?
It’s once again time to ramp up the search for short sale and put option candidates in housing-related industries. That’s precisely what I’ll be doing in some of my services.
Meanwhile, if you haven’t already considered liquidating some of your stock positions and paring down your risk, don’t wait any longer. The risk of a double-dip in housing and the economy is rising fast."
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