Stocks fell in early trade as the Existing Home Sales report came in dramatically worse then expectations. The consensus of most mainstream pundits was for a sales figure around 4.5 million units annualized, which represented a decline of about 13% from June.
What we got was a 27.2% plunge to the lowest figure since 1999, when the NAR started keeping records, as sales hit 3.83 million units annualized. A record drop to a record low as months supply hit a record high of 12.5. Distressed sales increased 1% from a year ago to 32% of the total. First time buyers dropped 5% to 38% of total sales, all cash offers were 30% of the total an increase of 6% from June. The few bright spots, the median price increased .7% to $182,600 from a year ago and on a numerical basis unsold inventory is 12.9% below the record of 4.58 million units set in July of 2008. Out west sales fell 25% to 870,000 units annualized.
There are a number of takeaways from this. First up is that tax credits do work to encourage people to buy things as indicated by the success of the cash for clunkers program, energy efficient appliance program and of course real estate. More importantly is that despite a 30-year contract rate of just 4.6%, and dramatically improved affordability, sales tanked, because the fundamentals were and are absolutely dreadful.
If you think I’m just picking on real estate here the same applies to stocks, which is why I haven’t recommended them since 2006, because the fundamentals were and are dreadful. With sales tanking prices will soon follow as the combination of grossly excessive debt, no jobs and stagnant wages makes it nigh on impossible for a huge segment of the population to buy a house let alone afford their existing payment, which is why foreclosures and bankruptcies are so high.
This isn’t rocket science it is common sense and logical reasoning that is the product of critical thinking, It does not take either an MBA or a degree in economics to figure it out, as a matter of fact most economists can’t figure it out. Which is why they are “surprised” every time some negative report comes out.
Remember when the Fed gave 100’s of billions in taxpayer funds to bailout the banks in 2008 with no accounting or oversight? At the time they announced they wouldn’t provide a list of the banks that received Federal Funds as it would stigmatize them and cause damage to their reputations. Bloomberg filed a FOIA request in an attempt to obtain this information from the Federal Reserve. Of course they declined and Bloomberg took them to court seeking to force them to turn the data over. The Fed lost in court when the judge told them to provide the data as requested. Yet still they refused and filed an appeal. Well this appeal has also been lost as the court refused to even reconsider the lower courts ruling. To date we still do not have the list of banks that received Federal Funds.
This isn’t democracy by the people and for the people nor is it capitalism. It is by definition fascism, which is the marriage of the corporations and the state to the detriment of the people. That’s our tax dollars they squander, propping up institutions that need to fail and should fail. Instead its bonuses for the banksters and foreclosure, bankruptcy, unemployment and food stamps for Main Street America, it is time to demand accountability.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
