Real Estate's Data Roller Coaster Continues
April 23 2009 - 12:55PM
Dow Jones News
If you don't like latest housing data, wait a few minutes.
Things will change.
With a new real estate report coming nearly daily - and some
showing conflicting results - data and builder stocks are on a
roller coaster.
Take this week, for example.
Wednesday, the Federal Housing Finance Agency reported home
prices rose 0.7% from January to February, the second straight
monthly gain. Builder stocks jumped.
Then Thursday, builders gained at the open, following cheery
numbers from the February 2009 RPX Monthly Housing Market Report.
It revealed that home sales increased on a month-over-month basis
in 22 of 25 covered metropolitan statistical areas, and 13 of those
areas posted their largest sales increases in February since
2006.
But then the stocks fell on news from the National Association
of Realtors: Existing-home sales dropped in March, while the median
price was shaved 12% from a year earlier.
Months' supply increased to 9.8 in March, which was "likely
understated and to rise further in coming months," Credit Suisse
pointed out in an analyst note.
Those results came as First American CoreLogic said national
housing prices tumbled 12.2% in February from a year ago and have
declined for 24 straight months.
"We expect home prices to continue to decline into 2010 as
economic conditions and excess housing inventories dampen prices,"
noted Mark Fleming, the firm's chief economist.
Remember real estate is local, and some markets are healing as
falling prices lure buyers to the closing table.
"It's very difficult to paint a national picture other than
statistical information," said Sherry Chris, president and chief
executive of Better Homes and Gardens Real Estate LLC. "Does that
tell you everything you need to know? There's no such thing as a
national temperature, so to speak, in anything."
Plus, each report aims for its own niche. The monthly FHFA
information, for example, is calculated using purchase prices of
houses backing mortgages that have been sold to or guaranteed by
Fannie Mae (FNM) or Freddie Mac (FRE). First American says it
issues a repeat-sales index tracking increases and decreases in
sales prices for the same homes over time.
But such nuances don't seem to matter to many real estate
investors who make decisions based on tone. Was the report good or
bad?
Such a strong reaction to what could normally be a
"shrug-of-the-shoulders data point" could be short interest, said
Rob Stevenson, an analyst with Fox-Pitt Kelton.
If the numbers are good, the initial pop in the stock tends to
be followed by a short covering, which drives the price up more
meaningfully. Alternatively, shorts may view negative datapoints as
additional proof things aren't getting any better, he said.
That provides them with ammunition to short the names again,
leaving these stocks in what has become a normal depressed
state.
Indeed, with two seemingly negative reports Thursday, builder
shares took a beating before recovering slightly. The Dow Jones US
Home Construction Index was recently down 1.58%. Centex (CTX),
which had been down more than 8%, was recently showing a 3.5% loss.
Ryland (RYL) was recently down 3.5%.
That could quickly change with the next report.
-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248;
dawn.wotapka@dowjones.com