New Home Stats

Statistics for August were released this week and the results were generally weak.

Monthly new home sales for August came in at 25,000.

That was a new record low number of sales for the month of August.  With the peak selling months behind us, monthly new home sales will drop below 20,000, if only due to seasonality.

On an annual basis, new home sales are poised for the worst year ever.

New home starts are creeping along at 2009 levels, at nearly 30% of the bubble year levels.  Average monthly starts are at 36,000.  Starts may appear to be a little high compared to average monthly sales of 25,000, but seasonality is coming into play.  Homes started now will not be completed until the Spring, aka, the selling season.  Inventories are nearing record lows.
 

Builders continue to reduce inventories in the face of stiff competition from the used home market. 


Even with low inventories, the low sales level is keeping the months supply uncomfortably high.

While the August statistics were gloomy, I anticipate that the results for the balance of the year will look even gloomier.  The good news is the worse the market looks the closer it is to the bottom.  Consider this...if, for whatever reason (IMO the probable cause will be lower pricing spurring demand, unless, of course, the laws of economics have been repealed) Spring's monthly sales average is something where around 2008's of 50,000 there will quickly be no inventory available.  Additionally, builder's older, misconceived & overpriced product has been getting weeded out over the last 2 years.  Current inventory is smaller, less appointed, better priced for the market product.  Opportunity is knocking.

Interest Rates

Maybe this is time.  Interest rates might be bottoming here.  They have broken a 5 month downtrend line with the indicators buried.  A bounce to 32.5 is in order.

Silver Update

Silver has blasted off its triangle launch pad.  It's up over 10% since mid-August.  Looking for a target of $23 on this move.

Yen Update

The Yen finally cracked.  The negative divergences in the Indicators became too much for the Yen.  The election pledge of Japan's new Prime Minister, Naoto Kan, to pursue competitive devaluation of their currency in a "Beggar thy Neighbor" policy move was enacted by the Bank of Japan on Wednesday.  Expectations of further currency competitive devaluations spiked the precious metals during the week.
  The Yen in hanging on the 50day ema, by a thread.  A break of the channel & the 50day opens the door to $112.50.

Yen

The Yen is starting to look heavy.  The most recent push up has not been confirmed by the Indicators.

Looking to get short the Yen at 119.5 with a stop just over 120.  Targets 112.5.

Puget Sound Home Sales

Another nice monthly wrap up by Redfin.

So far in August, we have seen record numbers of Redfin customers touring properties in Seattle, but buyers are very picky, and in no rush. Prices are going to stay down for the rest of the year, and probably longer.

This game of "chicken" will last until the Sellers realize that they have no pricing power.  If you need to sell you have about 6 weeks left in the selling season.  Otherwise, expect to hold your property until the Spring where you will be able to holdout for a lower price than now.  Buyers...continue to wait it out and make low ball offers otherwise risk paying more than you could purchase for at Xmas.

Interest Rates

Wow!  5 Yr Note Rates have been halved since April.  Looks like they need some sort of bounce, but that has been a losing proposition.

The only certainty is that rates can't get below zero, but a 50% haircut since April doesn't bode well for the economy going forward.  One obvious beneficiary is mortgage holders who flocked to the refi market recently.

The good news is that those refinancing are less likely to be putting their home on the market anytime soon.  Reducing the amount of potential "shadow" inventory will help the housing market recovery sooner.

China

China stocks looked poised to make a run.  LFC is coiling up in a potential triangle.  The stop is around 62.35.  I'll be adding around 63.  If it breaks 67.5, will be holding for 79, but fasten your seat belt because it's volatile.

PMs

Precious Metals are firming up.  Silver holds some triangle potential.  Great support at the 20/50 ma's.  The stop is at 17.47.  Triangles often produce strong thrust up and out.  Target is 21.

Lot Sales

According to Bizjournals, Banks are making the move at dumping lots.  With apparent discounts somewhere between 25% and 66% from cost, investors appear to be getting pretty good deals.  As I estimated back in February, according to the LRV formula, lots should have been down over 32%.  If you find the right motivated seller, deals at 2/3rds off start to become available.