The slow bleed in housing continues

That line is from Ethan Harris, chief US economist at Lehman Brothers Holdings Inc. The story so far is the much less interesting “Home sales hit slowest pace in 4 years”. Honestly, how dull. Bloomberg’s other good line is the Housing Recession – very nice. Very apt.

Remember, this is sales of existing homes (little building industry flow-on, but a good marker for underlying strength in the economy).

Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.

From Econoday,

existing home sales

The red line is the mortgage rate; the grey histogram is sales, the statistic of interest. Yep, it is steadily falling, even as lending rates perked back up a bit. Even as the Fed meets on Wednesday to discuss…things. Like how to describe their inflation (core inflation is down, but it’s down relative to a recent spike, and core inflation excludes food and energy prices – meaning core inflation isn’t likely to be the inflation the rest of us experience, anyway. Housing is terrible, but unemployment is pushing inflation’s luck). Even as financial market shenanigans potentially undermine existing sub-prime-mortgaged housing (beyond the pressure increasing rates already are applying) and narrow the pool of potential mortgagees by refocussing lenders on risk.

I’m pessimistic, I guess, is my point. Employment is okay, although unemployment may be rising. Investment was okay, although it’s hardly lighting fires under its own statistics. Fallout from the CDO-investing, yield-chasing hedge fund story shouldn’t extend far at all into actual firms’ investment and the expansion in manufacturing, although the effects of rates, housing and the value of the dollar should.

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