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Several years of home sales data under scrutiny
Estimates of existing homes sold over the past five years from the National Association of Realtors (NAR) may have been overblown, the trade organization announced on Dec. 15.
NAR said it plans to downwardly revise sales of previously owned homes going back to 2007 on Dec. 21, when it releases its monthly home sales report.
Characterizing the adjustment of previously released numbers as “a year-long re-benchmarking process,” chief economist Lawrence Yun explained on the NAR website that a series of errors may have led to over-counting home sales, including relying on data from the Multiple Listing Service (MLS) and outdated 2000 U.S. Census numbers.
NAR hasn’t revealed exactly how big the revision to home sales will be. Yun did say, however, that the decrease will be “meaningful.”
“For the real estate business, this means the housing market’s downturn was deeper than what was initially thought,“ Yun said.
According to Yun, NAR became aware of the upward “shift” in data during its most recent re-benchmarking process this year. With the help of the government, economists and real estate groups, the NAR will release revised numbers on Dec. 21 at 10 a.m.
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Builder confidence rises again
Builder confidence in the market for newly built, single-family homes rose two points to 21 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December. This marks the third consecutive month in which builder confidence has improved, and brings the index to its highest point since May 2010.
"While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."
Builder confidence primarily gained strength in the South in December, where a four-point gain to 25 brought that region’s HMI score to its highest level since March 2008. A one-point gain to 16 was registered in the West, while the Midwest held unchanged at 24, and the Northeast slipped one point to 15.
The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." Builders are also asked to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
"This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend," said NAHB chief economist David Crowe. "While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months."
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Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Dec. 16, 2011
*Western – regional species perimeter foundation; Southern – regional species slab construction.
Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.
Lumber: SPF lumber trading picked up early Thursday, driven by overseas sales and gains in futures. Mills reported order files extending beyond 2011, particularly in 2×4 #2&Btr. Lean inventories in the field contributed to increased demand, as customers tried to cover needs for January. Southern Pine lumber producers used double-digit discounts to pry a few buyers from the sidelines. Overall, demand was light, generating a perception among some traders that the market would "coast through the remainder of the year." Lean inventories and mild winter weather throughout the United States kept buyers coming back into the Coastal species lumber market to replenish inventories. Mills noted a pickup in demand Thursday in response to a run in futures. Inland species lumber producers reported good inquiry levels early in the week but a quieter tone later on. Continued good weather in the Midwest brought unexpected sales from that region. Ponderosa Pine board inventories were light, and a few fill-in loads that would ship before Christmas sold. Idaho White Pine producers reported little inventory to sell. Inquiries were light, and prices remained at last week’s levels. Log shortages continue to be a problem for Eastern White Pine producers. Inventories are low and prices firm. Inquiries for extra loads of imported Radiata Pine finger joint mouldings circulated, but mill offerings were light. When Western Red Cedar buyers did purchase, it was solely for delivery in 2012. Remanufacturers and buyers from the industrial segment were active purchasing volumes for the first quarter.
Panels: OSB mills reported a slow start to the week, but that activity improved somewhat late. Buyers indicated they had covered most of their needs and were content to wait and see what the market brings after the holidays. Steady demand in the Southern Pine plywood market propelled mill order files out another week and into 1/9 for the most part. Rated sheathing prices edged $5 to $10 higher in most instances. Western Fir plywood producers reported scant inquiry from customers. While some producers carried order files extending through the end of the year, availability at other mills and the secondary level was enough to soften CDX prices. Canadian plywood producers reported a steady pace to the market. Prices have moved up steadily as order files moved into the second or third week of January. Concerns over holiday shutdowns, as well as the need to fill inventory holes, brought buyers to the table. In the East, particleboard and MDF mills continued to enjoy greater success at moving production more readily and were able to maintain solid order files. Discussions revolving around mill shutdowns circled about the market.
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