The MSM is cackling at the Homebuilders Optimism Index being at a 6 year high. It is at the same level as 2006. Isn’t that precious. Take a look at the chart. The last time the index was this high, homebuilders were selling ONE MILLION new houses per year. Today they are selling 500,000 new houses per year and the trend is down. This is another example of propaganda that does not match reality. The index and actual housing starts ALWAYS tracked each other closely for the last 25 years and now suddenly in the last few months the index SOARS, while starts actually decline. The misinformation campaign couldn’t be any more blatant.
Home-builder optimism hits 6-year high
Goldman Sachs sees favorable recovery scenario for U.S. market
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Optimism among the nation’s home builders climbed in September for the fifth straight month to reach the highest level in more than six years, according to a closely followed index released Tuesday.
Reuters
A construction worker builds a new home at a development area in San Marcos, Calif., last March.
The National Association of Home Builders/Wells Fargo housing market index gained 3 points to a seasonally adjusted reading of 40, the highest the index has been since June 2006. Economists polled by MarketWatch had anticipated a reading of 38.
The index still isn’t at the 50 level indicating “good” conditions but has climbed back from as low as 8 during the recession. The index didn’t even break 20 until December 2011.
“The traffic through the model homes is increasing, but it’s also the quality of the traffic that is increasing. We’re moving from window shoppers to people who are real buyers, people who are ready to put down a deposit,” said NAHB senior economist Robert Denk to MarketWatch Radio. Listen to interview.
Gains were made for each of the three components. Present sales rose 4 points to 42, sales for the next six months jumped 8 points to 51, while traffic of prospective buyers edged up 1 point to 31.
Gains were seen in each region — notably, a 9-point pickup in the Northeast, which recovered after having suffered an 11-point drop in August. The other regions continued their mostly upward slope.
Though the index historically tracks closely with single-family housing starts, the recovery in optimism has outpaced the hard data. In July, single-family starts reached a seasonally adjusted annual rate of 502,000, a gain of 42% from March 2009 lows. The Commerce Department reports August housing starts data on Wednesday.
The shares of publicly traded homebuilders have surged as well — an exchange-traded fund of homebuilders (NAR:ITB) has more than tripled from March 2009 lows and gained nearly 67% in 2012 to date.
Goldman Sachs, ahead of the data, upgraded its rating on the shares of several builders and said it expects growth in housing activity in a range of 20% to 30% for each of the next few years. Read The Tell item on Goldman note.
Also Tuesday, Ryland Group (NYSE:RYL) , a builder based in Southern California, reported that orders for July and August climbed 62% compared to the same two months of 2011.
Thinker says:
The disinformation campaign will include many more sectors — below is one from the retail sector just yesterday. Most people won’t recognize that it’s an attempt to improve consumer sentiment leading into elections and the holiday season. In reality, it’s just PR designed to convince the ignorant masses that their homes are worth more, their 401Ks are earning more and they can go back to living the good life now. Nothing could be further from the truth, and I think most people ARE waking up to that fact.
Sept. 17, 2012, 2:59 p.m. EDT
Holiday Sales Look Jolly for Retailers
Survey of retail CFOs show more expect sales to rise than decline
By Andria Cheng, MarketWatch
NEW YORK (MarketWatch) — It looks like retailers are feeling pretty upbeat heading into this year’s holiday season.
Coming off a strong back-to-school season, the industry’s second-biggest selling period, retailers project their second-half comparable sales to rise 3.6%, the biggest increase in at least four years, according to a survey of 100 major retail chief financial officers by accounting and consulting firm BDO USA in August and September.
The firm declined to give examples of the retailers it surveyed, except to say respondents included 13 from companies with over $1 billion in revenue.
Toys ‘R’ Us bets on new tablet
To attract shoppers in the face of increased online competition, Toys “R” Us introduced its own tablet device, Tabeo, and is also making 50 hot holiday toys available for reservation. Andria Cheng speaks to CEO Jerry Storch to get the details.
In total, about 48% of CFOs project an increase in comparable sales in the second half, compared to 10% of them who expect declining sales.
The survey followed another survey released by consulting firm Hay Group last week, which said 75% of retailers it polled forecast an increase in holiday sales this year, the highest percentage since 2008. That survey included opinions of 14 retailers including Ann Inc., Hot Topic Inc. and Chico’s FAS Inc.
Bill Simon, head of Walmart U.S., the biggest unit of retail giant Wal-Mart Stores Inc., said at a Goldman Sachs presentation earlier this month that the discount chain is “very optimistic” about its fourth quarter.
Behind the increased optimism, retail finance chiefs are feeling more confident in the overall economy, with the percentage of CFOs projecting an ongoing economic turnaround nearly tripled this year to 32% from 11% last year, the BDO survey showed. Still, overall, most of the finance chiefs expect economic conditions to continue to stagnate.
“Compared to where we were last year, retailers are more optimistic,” said Doug Hart, a partner at BDO, in an interview. “There’s more stability out there in the July-through September period, and back-to-school sales ended up being relatively strong.”
The rosy outlook, however, doesn’t mean retailers are worry free, the survey showed.
More than two-fifths of retailers said unemployment will have the biggest impact on consumer confidence during the remainder of 2012, while another 29% point to the U.S. presidential election and its outcome. Other concerns on the minds of retailers include financial market volatility, personal credit availability, debt levels and a weak housing market. Fuel prices are less of a concern, with only 2% of CFOs citing that as a top threat, down from 9% last year.
“Retailers are cautiously optimistic,” Hart said. But “there’s some uncertainty in the future.”
Amid pressure to reduce profit-eroding discounts, 58% of retailers said too much inventory is the greatest risk to their holiday sales this year. In comparison, last year, 53% of them cited not having enough in stock as their biggest risk.
“Retailers still remember the lessons from 2008,” when a glut of inventory led to deep discounts, Hart said. “They are still cautious on inventory.”
Overall, CFOs project a 1.1% increase in inventory over their 2011 level, with 55% of them keeping stock level the same, 26% seeking an increase and 19% planning to cut their inventory.
In terms of the biggest risk to their profit margins, cost of products topped the list of concerns with 40% of CFOs citing that as the primary threat. Almost 20% of them each respectively cited logistics and transportation; store operating costs; and inventory levels and discounts as the top threat.
However, inventory looks to be a bigger concern among larger retailers. Of 11 retailers whose sales ranked among the top 100 in the industry, 36% of them said inventory levels and discounts are the biggest threat to their profit margins, up from 25% last year, the survey showed.
“Commodity costs may have stabilized, but price-conscious consumers are keeping retailers on their toes,” said Al Ferrara, another partner at BDO.
Andria Cheng is a MarketWatch reporter based in New York.
Well-loved. Like or Dislike:
6 
0
18th September 2012 at 12:18 pm
DaveL says:
I will only comment on the area of the country I am currently living in, and I see a pretty good amount of new housing going up in an area 20-30 miles from the city. Can’t all be specs.No commercial construction though.
Like or Dislike:
2 
1
18th September 2012 at 12:39 pm
DaveO says:
Haved lived in the Phoenix area since 2005 and can tell you that there are a large number of homes being built but very, very few folks are purchasing them. Just one of many examples is a neighborhood near me which used to be a dairy covering over 20 acres. They put the roads and utilities in a couple years ago and then let it sit. The first part of this year, Jan/Feb they started building like there was no tomorrow (pun intended) and now they have nearly all 20 acres in some stage of construction. A stop in the modle home sales room 8 homes sold. I immediately thought of China’s empty cities. Frankly, this is just one more effort to lie to the sheep. The only good that came out of it is the work/material used to produce them. Oh, yeah, and an increase in “Home-builder optimism .”
Well-loved. Like or Dislike:
5 
0
18th September 2012 at 12:47 pm
Stucky says:
Here is the NAHB’s charter;
“NAHB’s various groups analyze policy issues, take the industry’s story to the public through the media and other outlets, monitor and work toward improving the housing finance system, analyze and forecast economic and consumer trends, and educate, train and disseminate information to members.”
In other words, they are exactly like NAR. A bunch of self-serving, lying sacks of shit, spewing propoganda in hopes of getting dumbasses to buy.
I’m talking about the organization itself, not individual builders. One thing I’ve learned over the past few years …. organizations lie, as a matter of due course. You can’t believe a word they say. We are a nation of liars.
Well-loved. Like or Dislike:
11 
0
18th September 2012 at 1:07 pm
Mary Malone says:
Might as well build and sell new homes. The existing stock is infected with clouded title. Heh. Joke’s on us.
Well-loved. Like or Dislike:
5 
0
18th September 2012 at 3:11 pm
Tbessi says:
I believe the data. I bet there are less than 1/2 the number of home builders now than 2006, so at 500,000 houses per year they are seeing more activity than they are used to in the past couple years.
Its all in how the graph and polls are asked.
Well-loved. Like or Dislike:
11 
0
18th September 2012 at 3:17 pm
backwardsevolution says:
And the home builders are being helped by all of the foreclosed inventory that the banks are keeping off the market.
The next article is over a year old. What’s happening on this front?
“The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds.
These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.
You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs (GS) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.
In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates.”
http://www.thestreet.com/story/11224917/a-huge-housing-bargain–but-not-for-you.html#disqus_thread
Well-loved. Like or Dislike:
8 
0
18th September 2012 at 3:31 pm
TeresaE says:
tbessi, GREAT call. You nailed it.
My industry has been like that for the past four years. Halve the companies, then the existing companies cut their employees, so for those left, things seem really, really, really busy.
The individuals are busy as heck, the companies, not so much.
Which explains the continuous bull that is the ISM. And ADP, and NAR, and any other number of national, delusion-ed organizations that tout crap as reality.
As for selling our homes/titles to vulture funds. Well now. What happens if we go to war with Iran, then China starts dumping treasuries.
Anyone else think that our very homes could be used to pay them off and keep the illusion of cheap financing going? Well, for a little while longer.
Then, if that goes off without a hitch, next up will be our 401(k)s & pensions being mandated to hold treasuries.
Eventually, they will run out of things to sell off, or confiscate, then the reality of printing trillions upon trillions and playing benevolent ruler to the FSA will come home to roost.
I no longer respect Warren Buffett, but while Bush was in office he warned us that one day our children and grandchildren would wake up sharecroppers paying homage and taxes to China and Washington. Seems he was onto something (then he drank the kool-aid and now is 100% on the side big nightmare government).
Well-loved. Like or Dislike:
5 
0
18th September 2012 at 6:42 pm
DaveL says:
DaveO: I’ve only been here for 10 months, but I can’t believe all of these builders are putting up houses for the hell of it. Fed buying mortgages has got to be something in their future.
Like or Dislike:
1 
0
18th September 2012 at 7:22 pm
Dbacktim says:
Dave O. Where is the subdivisions location. Not city, but rather intersecting streets.
Like or Dislike:
2 
0
18th September 2012 at 8:53 pm
Fool on The Hill says:
Every new jail cell is counted as a NEW HOUSE start and the prison racket is a booming business.
Data about prison populations is virtually impossible to obtain.
In my state there is a new county jail south of my home next to a thirty-odd year old one that is vacant.
Typical inside temperatures in the new jail is several degrees below 70 F with outside temps in the high 90s.
The uninsulated concrete walls in this mass produced structure are less than a foot thick’
The insulating value ( R 1) is that of a one inch thick dry pine board a-la my woodshed.
It takes 39 inches of concrete to get R1.
These structures are one third as energy efficient as my woodshed!!
The taxpayers are footing the bill.
t
Upstate is a new federal prison that is not in use because there is no money to staff it.
In the Susquehanna estuary which has peen poisoned by agrabiz runoff watermen are making do as prison guards.
Like or Dislike:
1 
0
18th September 2012 at 10:27 pm
Buckhed says:
So housing is up…why then did the WSJ write that lending is at a low point ?
http://online.wsj.com/article/SB10000872396390443995604578004231728567010.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Like or Dislike:
4 
0
18th September 2012 at 10:49 pm
tbessi says:
I’m in construction. Met with a developer looking at putting in another shopping center in my neck of the woods. .25 mile to the north a dead shopping center. 7 miles to the south another dead shopping center. 1 mile to the south another dead strip mall.
I just have to shake my head and say sure, I’ll gladly build your project.
The belief in exponential growth forever……Priceless!!!!
Like or Dislike:
2 
0
18th September 2012 at 8:29 am
Administrator says:
HOUSING STARTS STAGNANT – PERMITS DECLINE – PREVIOUS MONTH REVISED DOWN
U.S. housing starts rise 2.3% in August to 750,000
WASHINGTON (MarketWatch) – Construction on new U.S. homes rose 2.3% in August to an annual rate of 750,000, while permits fell slightly from a multi-year high. Economists surveyed by MarketWatch had expected starts to climb last month to an annual rate of 775,000 on a seasonally adjusted basis. Housing starts in July were revised down to 733,000 from an original reading of 746,000, according to Commerce Department data. Permits for new construction, viewed as a gauge of future demand, fell to an annual rate of 803,000 from July’s slightly revised level of 811,000. Permits for single-family homes, which usually account for three-quarters of the housing market, edged up to an annual pace of 512,000 last month, the highest rate since March 2010. Housing starts are 29% higher compared to one year ago
Like or Dislike:
1 
0
18th September 2012 at 8:35 am
Stucky says:
“Every new jail cell is counted as a NEW HOUSE start ..” — Fool on The Hill
Is THAT true?? A new jail cell is considered a new house start?
If so, all I can say is ‘Holy Shit’, and ‘that’s funny!!’. That’s taking statistical bullshitting to a whole ‘nuther level.
Like or Dislike:
3 
0
18th September 2012 at 9:18 am
Thinker says:
I don’t know how it works in other states, but in Illinois, many municipalities and the Fed government will cough up tax abatements and funding for new construction, to claim they “created jobs” in building malls, factories, etc. even when there are empty ones sitting around.
In some cases, no retail stores ever open in the shopping centers they build. In others, a restaurant and a store or two will gain a foothold, but most of the commercial space remains empty.
Like or Dislike:
3 
0
18th September 2012 at 9:28 am
Administrator says:
HERE IS THE HEADLINE. YOU HAVE TO GO TO THE END OF THE ARTICLE TO FIND OUT THAT 22% OF THE SALES WERE FORECLOSURES OR SHORT SALES AND 18% WERE TO INVESTORS. SOUNDS REALLY STRONG TO ME.
Sales of existing homes surge in August
Level of activity best since May 2010
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Sales of existing homes surged 7.8% in August to the best level in more than a year as low interest rates and a slowly improving jobs market help fuel a rebound in activity.
Like or Dislike:
4 
0
18th September 2012 at 10:22 am
tbessi says:
Installed utlities roadway etc for a new development in Indiana last year, local government project. Still setting vacant. The city couldn’t use the money for fixing infrastructure or demolishing and renovating a existing property. The FEDs required it on expanding the local government.
Brilliant!
Like or Dislike:
3 
0
18th September 2012 at 10:53 am
Administrator says:
Canceled contracts dog real-estate recovery
By AnnaMaria Andriotis
A housing recovery may be under way, but there’s an obstacle that appears to be slowing down the rebound: the unusually high number of buyers who walk away from their contracts.
An average of nearly 18% of signed contracts on existing home sales were canceled during the three months ending July, according to data released this month by Capital Economics, an independent research firm. That’s the highest all year and the most since May 2010, when that figure reached 23%; in the five years before the housing slump started, the average never went higher than 10%. Separately, 36% of Realtors are reporting some kind of problem with a contract, including cancellations, delays and renegotiations of the sales terms, according to August data by the National Association of Realtors. That’s up from 30% earlier this year.
The latest setback comes as home sales are rising. Existing-home sales increased 7.8% in August from a month earlier and rose 9.3% from a year prior, according to data released this morning by the NAR.
Ironically, the recent pickup in home sales is contributing to rising contract cancellations. As more buyers compete over a limited inventory of for-sale homes, some are bidding aggressively to get the seller’s attention, but not assessing whether they truly want the house until they’re in contract, says Bryan Sweeley, a real estate agent in Santa Clara, Calif., with ZipRealty. This strategy could make it more likely that buyers will walk away from homes if red flags are raised in an inspection or the appraisal, he says. As we previously reported, appraisals have been derailing home sales in cases when the appraised value of the home comes in lower than the purchase price the buyer and seller had agreed to.
Tight lending requirements are also contributing to contract cancellations, says Paul Diggle, property economist at Capital Economics. As more buyers move off the sidelines to purchase a home, they’re finding they can’t qualify for a mortgage, he says. (Data from the Mortgage Bankers Association shows that mortgage applications for home purchases have been relatively flat most of the year with some increases posted in recent months.) While buyers are encouraged to get preapproved for a mortgage before making an offer on a home, it’s not a requirement. But skipping this step opens them up to the possibility of being denied a mortgage on a property that they’ve already entered into contract on.
To be sure, contract cancellations don’t necessarily mean those buyers are leaving the market, experts say. In some cases they’re making offers on other homes or working on a new contract with new terms on the same property in question.
Canceled purchase contracts can cause problems. Still, for sellers, canceled contracts can range from a slight nuisance to a major setback. In most cases, they extend the time sellers spend trying to unload their home. It may also set them back financially if the seller has moved out of the property in anticipation of the buyer moving in.
But it’s buyers who can incur the biggest financial setback when walking away from a contract—which can include losing the deposit they’ve paid on the home. Upon signing the contract, buyers typically put a small percentage of the purchase price down to be held in escrow. Paul Howard, a buyer’s broker in Cherry Hill, N.J., says buyers should ask their agents to include contingency clauses in the contract that state the buyer can walk away from the home if financing falls through or if the inspection or appraisal of the home isn’t satisfactory. (Some transactions might require additional contingencies.) In most cases if they abandon the deal based on a contingency clause in the contract, buyers should be able to get their deposit back.
Like or Dislike:
1 
0
18th September 2012 at 11:55 am
TeresaE says:
@Thinker, same in Michigan.
The city I live in (former “Whitest City in America” as dubbed by Time or USA Today or some other rag) encourages new building everywhere – it increases their “taxable value.”
Because they never remove the unsellable housing/commercial inventory from that “taxable value,” it’s a win for the planners that can show year after year after year “improvement” in the numbers – which are highly tracked and anticipated.
Meanwhile, the city enacted legislation that once a house is abandoned, or empty for more than 48 hours, the house – no matter the age and there are old, old, homes in town – MUST be brought 100% up to code. So, houses sit empty that could be rehab’d to a liveable condition for a few thousand, but thanks to the city, they sit empty as nobody wants to buy them for $40-$80k plus have the city up their asses while dumping an additional $50-$100k into the property. The demanded rehab brings them WAY above market. The best part is that a cash-strapped city added five more people to the building/inspection department to drive around and catch houses/buildings, thus blocking the sale.
So, they totally lock out the cash buyer/investors /kids that want the dream, while taking federal & state funds to buy up other houses and then “sell” them to low-income (primarily minority) buyers using FHA loans.
And yet they keep building. Within a couple miles from my house are no less than five new homes being built – while dozens remain empty, most without signs or agents. They have allowed dozens of commercial buildings to be built (with mostly abatements and bonuses thrown in), while dozens and dozens and dozens more sit idle and deteriorating. They also continue offering perks to build while the city, county, state and federal inspectors go forth and shut businesses down left and right.
When the free federal cash falters this city, along with most of my state, are going to be right back in the deep shit we were in 10 years ago. If we were to blow away the media headlines, and look at fundamentals, we would see that future has bigger problems than the “huge” problems we buried in the past. Mainly buried under huge amounts of free federal fiat.
It isn’t just the federal government using the same old methods that haven’t worked until now, but will somehow magically work tomorrow.
The delusion, corruption and stupidity, are so ingrained, that I just don’t see how there is any fixing it. We would need half the people benefiting (like those new building inspectors & admin) to wake up and demand change that would work. Since it would mean personal sacrifice for the greater good, and they make the rules, it is insanity to believe it can voluntarily – and without great pain – change.
I’m full up on the crocks of shit that we have been/are being fed on a daily basis.
They don’t even bother covering up lies anymore. They just send them to page 2 and run the “breaking” news that Romney panders to his audience.
Like or Dislike:
4 
0
18th September 2012 at 12:26 pm