Housing Has Bottomed – Or Maybe Not

I am working extra hard to stay ahead of the spin in my attempts to separate the facts from the fiction that now permeate the news cycles.

We’ve recently talked about the all-in effort to convince us that Peak Oil has been debunked, which is an effort that is principally concentrated in the US and UK press. I’ll have more on that in future reports.

Recently there have been a bevy of articles in a variety of news outlets trumpeting the recent new home sales numbers from home builders as indicative that the long-awaited housing bottom has finally arrived. My view is that it is too soon to make that call.

Here’s a recent example:

Home Builders’ Health Improves

America’s biggest home builders are posting the largest gains in sales and new orders in years, fueling speculation that the sector is starting to turn the corner.

Although many builders reported continued loses for the first quarter, the loses are narrowing when compared with earlier quarters and the companies are citing a significant jump in traffic.

Builder stocks, which have risen 31% so far this year as measured by the Dow Jones U.S. Home Construction index, advanced further amid Thursday’s news, with every major competitor moving higher.

In the article the following home builder data was presented:

• Pulte Group (PHM) reported that new orders climbed 15% yr/yr
• Ryland Group (RYL)reported that closings increased 25% and orders jumped 46%
• D.R. Horton said that orders climbed 19%

And then there are articles like this next one whipping up the fear of missing out on the housing bottom noting that bidding wars seem to be back:

Stunned Home Buyers Find the Bidding Wars Are Back

April 27, 2012

A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back.

From California to Florida, many buyers are increasingly competing for the same house. Unlike the bidding wars that typified the go-go years and largely reflected surging sales, today’s are a result of supply shortages.

While it is certainly true that bidding wars are happening here and there, the article is quite misleading in characterizing them as happening coast to coast (“from CA to FL…”) as if they are now a feature of every market.