An index that has been tracking new home sales since 2005 says its historical data dates as far back as 1830. Winans International has patented a combination of housing studies to provide a continuing data set without the scaling and gapping problems found in other studies, it says.
The index found that from its all-time record of 296,000 set in March of 2007, housing prices have declined -16.8% to its current level of 246,300. That's the worst price decline in U.S. new home prices since the 17-month decline of -17.8% from May 1969 to October 1970, says the index.
It could get worse. The worst decline of U.S. new home prices in the last 100 years was the 55% decline from 1929 to 1932 during the Great Depression.
This is just the latest in predictions from housing prognosticators, who are looking backward not forward.
We all know that housing price predictions are about handicapping stocks, so it's no surprise that investors can only get a sniff of what's happening. To get to the meat, they usually have to buy the full report. So the bottom line is, it's about sales and sales improve in a climate of fear.
If you don't want to pay to be scared, you can look at the National Association of Home Builders' useful Housing Information Center . There you can find essentially the same information for free.
The latest NAHB forecast is for housing sales to drop 22 percent in 2008. Housing is in its "deepest, most rapid downswing since the Great Depression," says David Seiders, chief economist for the NAHB. "More and more of the country is now involved in the contraction, where six months ago it was not as widespread."
That sobering tidbit was just verified by the Federal Reserve Beige Book report in which eight of the twelve Fed regional bank districts reported a "weakening in the pace of business activity."
And the other four reported "subdued, slow or modest growth."
The housing sector isn't going to see improvement any time soon. All 12 districts reported overall drops in home prices, suggesting that the mortgage market flu is airborne. The reason is tight credit, where standards are being set making it harder to obtain a mortgage loan. That's causing sales to slow down even in healthy markets.
However, there are reasons to hope things will get better for sellers and buyers. The Beige Book noted that foot traffic is increasing to homes for sale, as buyers sniff around for bargains.
The national malaise has caused some areas to be undervalued, according to a report by National City Corporation and Global Insight. That report found that 88 percent of 330 housing markets surveyed showed price declines but that translates into improved affordability.
The most overvalued city wasn't in California or Florida, for a change. That dubious honor went to Bend, Oregon, where prices were judged to be overvalued by 59 percent. On the other end of the spectrum, homebuyers can find serious bargains in Louisiana and Texas. Dallas, for example, is undervalued by 30 percent.
So you see -- all the prognostication in the world doesn't matter. It boils down to what's happening in the local marketplace.
