Another month, another indication that the much anticipated total economic meltdown has yet to arrive. Calculated Risk nicely sums up today's report on November existing home sales, as Felix Salmon nicely summed up both CR's and Jim Hamilton's reactions to yesterday's report on November new home sales. Says Felix:
November new home sales hit a seasonally-adjusted rate of 1.047 million, and the numbers for August, September and October were all revised upwards as well. If you squint, you can almost see an upwards trend...
And prices, too, while not exactly rising don't really seem to be falling, either.
In today's post, Calculated Risk does warn...
As I've noted before, usually 6 to 8 months of inventory starts causing pricing problems and over 8 months a significant problem. With current inventory levels at 7.4 months of supply, inventories are now well into the danger zone and prices are falling in most regions. Nationwide prices were off 3.1% from November 2005.
... and we may as well add that some of the forward looking statistics from earlier this month were mixed (with housing starts positive, building permits negative):
Still, Felix is sounding almost upbeat...
Whether we go back to 98-01 or merely to 02, however, the fact is that home sales will still be reasonably strong on an absolute level even if they're below the peak of the past few years. The economy was fine then, and it should be fine now.
... as is Jim:
When I suggested two months ago that we'd seen the worst for home sales, many or our readers responded with derisive skepticism. But so far, my analysis seems to be holding up. November now marks the fourth month in a row that home sales have come in above the value from last July.
There are, to be sure, plenty of risks, including this one:
I expect to see a drop in construction employment, and that could itself generate other problems for the economy, particularly if it appears in conjunction with other bad news such as more job losses from the struggling domestic auto sector.
Right, but the signs of these problems are still nowhere to be found. Consider this picture, from the Job Openings and Labor Turnover Survey:
Though this data is only available from December 2000, both employer hire rates and job posting rates were falling into and through the 2001 recession (represented by the shaded bar). There is simply no indication that such dynamics are currently in play. It could happen of course, but to appropriate Professor Hamilton's comments:
... so far, I think we have to say, it hasn't happened yet. And a replay of 1994-95 looks like the narrow favorite on which to place a bet.
UPDATE: Barry Ritholtz says not so fast with the bottoming-out meme. Similar thoughts can be found at The Nattering Naybob Chronicles, at The Housing Bubble Blog, at the Housing Doom Housing Bubble Blog (hat tip to keith at Housing Panic), and at Nouriel Roubini's Blog. Murat Tasci and Laura Kleinhenz have more on the JOLTS data, at the Cleveland Fed website.