New home sales soar far above forecasts of cooling market - Nov. 29, 2005

New homes sold at an annual rate of 1.42 million in October, the Commerce Department said, up from a revised 1.26 million pace in September. The 13 percent increase was the biggest jump since April 1993.

Economists surveyed by Briefing.com had forecast that sales would slow to a 1.20 million rate.

This is why economists don't know shit. The recent weeks of "Cooling/slowing housing market" reports have pissed me off. Not only because I'm selling my house, but because it's stupid. Yes, rates have risen.. whoopdy-doo. They are still below 7. The average rate in the '90s was 8%.. which really still isn't too bad. Everyone has been crying "THE BUBBLE HAS BURST" over the last few weeks, just because there was a small slowdown. Of course, the media is all over it like smell on poo, which does nothing but scare people. The slowdown couldn't have had anything to do with hurricanes, could it? There are entire regions where people buying homes almost came to a standstill. Katrina certainly didn't make people want to move to N.O. or the Mississippi coastal areas. Add that on top of the rise (and gouging) of gas/oil/material prices, and people weren't leaping to build a new house. As well as the insanely moronic decisions by the Fed to actually RAISE rates during that time. Now, oil prices have gone down, rates may be cooling off and material costs should be getting better.

Besides, there is NO "bubble". Every housing market is different, and each will do good or bad based on local and regional factors. If an area has jobs, people will move there, and people will want to stay there. This gives the sellers market. When an area loses jobs (plant closing, for example) and more people are selling than wanting to buy, it's a buyers market and the "bubble" pops.

Take a few examples of why reports of popping bubbles is dumb:

South Florida.. home values have (and will keep) gone up because people still want to live in that hell hole, and there is only so much land. Less land means less new homes, means higher prices for resales. As long as people keep wanting to move to hurricane central, prices will be high.

Los Angeles.. people can pay over $500k for a 1200 square foot "bungalow". Why? Because of less land, few people leaving, and everyone thinks they will be the next Tom Hanks. There are jobs, so people will go there and since more come than go.. prices will stay up.

My area... this is simply a growing area. Jobs coming in, and not so many people want to leave the area. So, prices will stay up because of supply and demand.

So, I hope economists shut up and the media can stop their "OH NO! HOUSING MARKET GO BOOM!" frenzy. Just let the various markets do as they will.