When I read the popular news, I’m often frustrated by how the news is incorrectly interpreted and presented to the public by reporters. Could it be that they just tell us what they want us to believe or are they simply not doing a good enough job uncovering the real facts behind the news?
I’m talking about economic news, of course, and how reporters often don’t understand the significance of the financial numbers they report on. Case in point is the July homes sales figures released this past Tuesday.
You’d have to be hard pressed to find housing sales news accompanied by anything but positive headlines. I couldn’t find one negative news headline on the housing sales numbers… only positive headlines like “Housing Market in Good Shape,” “Very, Very Healthy July Housing Sales,” and “July Home Sales Third-Highest Level on Record”… All headlines that make consumers feel as though all is well.
But here’s what I see behind the housing numbers and from other sources:
— Sales of previously owned homes in the U.S. declined in July by 3%. Economists had been expecting only a 2% decline in sales.
— July home sales fell even though it was cheaper to borrow money in July that it was in June.
— Sales of homes in the Midwest dropped 4.8% in July from June. In the West, they fell a large 6.6%.
— U.S. mortgage applications fell 6.3% last week, another big number.
I see the economy slowing, thus resulting in slower home sales. And as I’ve said all along, the Fed’s rate increases, no matter how small, will have a quick negative effect on those consumers who are overextended.
In the United Kingdom, housing prices have started to actually come down, as I had predicted in recent commentaries about my analysis of the London property market after a recent trip there.
Rightmove, a U.K. organization that bills itself as the “U.K.’s number one property website,” says it compiles the largest monthly sample of U.K. residential property prices. Right now, the service is saying asking prices have fallen by about $8,000 in the U.K. in five weeks. The headline… “If This Isn’t a Slowdown, What Is?” Now, that’s what I call an honest headline.
Some other points from Rightmove’s U.K. study: For the first time in months, in June and July the number of properties coming to market has surpassed the number of properties coming off the market. In greater London, the asking prices of homes have fallen 4.3% in five weeks.