MarketWatch: Housing hasn't bottomed yet (Don't bother chilling the Champagne)

Housing hasn't bottomed yet
Don't bother chilling the Champagne
By Greg Robb, MarketWatch



WASHINGTON (MarketWatch) -- Economists who are calling the housing bottom are like a baseball team that's close to clinching a playoff berth but keeps losing, and its clubhouse staff has to keep loading and unloading Champagne across the country.

Every month, these economists say the bottom is close, but really some poor souls are putting the Champagne back on the truck for the next month.

"People want to believe the end is near, but we just don't think so," said Josh Shapiro, chief economist at MFR Inc.

The Case-Shiller nationwide index was down a record 15.4% in the second quarter, but the optimists noted that the 20-city index was only down 0.5% in June, the slowest decline since last July.

Shapiro said that the data isn't seasonally adjusted, and so the small decline in June came at a time when most of the year's buyers are out looking for homes.

"I wouldn't get too carried away with the fact that you've seen a smaller pace of decline," he added.

Investors should take comfort simply in the fact that markets are working. Patience is required.

"It is the peak selling season that is being reported, so any downward pressure on prices would tend to be minimized during the period where demand is seasonally the strongest."

A separate report on prices, released by the Office of Federal Housing Enterprise Oversight, showed a smaller decline than the Case-Shiller index. But even here, sales fell at a record pace, down 4.8% in the second quarter from a year ago.

"New home sales have continued to plunge," said Jim O'Sullivan, economist at UBS in New York.

The OFHEO data is only for mortgages that conform with Fannie Mae and Freddie Mac guidelines, so leave out large parts of the market, according to O'Sullivan. .......(more)

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