Those still bullish on the U.S. housing market after this week’s new home sales report are “nuts,” according to Societe Generale’s Albert Edwards.
Edwards notes that, yes, those involved in the housing market are traditionally positive, but questions whether or not current participants have lost their minds.
From Albert Edwards:
I don’t normally write about monthly data releases but I want to make an exception this week regarding February’s shock 16.9% mum decline in US new home sales. With sales languishing at a record low, I had to laugh when I read the Reuters story. The phrase that made me chuckle was “despite the surprise plunge in sales, economists do not believe a new downturn is underway” Are they nuts?! We are plunging to new all time lows for many housing indicators (see chart below) and we are not in a new downturn? I know this industry has a consistent bias towards optimism about which one gets rather blasé, but this really does deserve some sort of special award. I’m going to think of a name.
Edwards then goes on to admit why he’s not a glass half-full kind of guy.
A gentleman, whose name I didn’t quite catch, decided it would be a jolly good idea to smash a beer glass in my face. Despite no lasting damage to my handsome visage, I did emerge from the evening minus a front tooth. Maybe that’s why I get suspicious whenever I see a glass half-full.
Looking at this chart on the U.S. housing market, there isn’t much to be optimistic about.
Photo: Societe Generale