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News Link • Housing

Where Are The Housing Bulls Now?

It’s no secret, Hedgeye has been very bearish on housing. Our Financials Sector Head Josh Steiner presented his seminal work on this topic in a 101 page presentation about two months ago (if do not have that presentation and are not yet subscribing to our Financials vertical please email The presentation boiled down to one key point: home prices have anywhere between 15 – 50% more to fall nationally based on the supply and demand dynamics we see in our mathematical models. New home sales reflect contact signings and deposits, which is more real-time than yesterday’s Existing Home Sales release (which reflect activity from 1-2 months prior). The chart below shows New Home sales fell off a cliff in May, which are post tax-credit. The July number reported today is not positive. More aptly, it is a disaster. (And this low-key Canadian isn’t prone to hyperbole.) Specifically, purchases fell 12 percent from June to an annual pace of 276,000, the weakest initial release prior to revision since data began in 1963. As it relates to price, the median price of $204,000 was the lowest since late 2003 and down 4.8% year-over-year. We’ve outlined new home sales data going back 18 months in the chart below. Not surprisingly, consensus estimates were off large with the range being 291,000 to 355,000.

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