CHICKENS ARE STUPID

Do you know why Chicken Little was stupid? Because he was a chicken. In spite of an otherwise very nice day, young Mr. Little insisted the sky was falling. The same can be said for those who write about our housing market.

Below is an excerpt from a report in today's MarketWatch.com. Now I happen to enjoy MarketWatch a lot. And I don't mean to insinuate that Mr. Goldstein is, in any way, related to common barnyard fowl. His article is merely an example of falling skies, and bad news selling. Let's start off with the "nice day" portion of the story, shall we:

By Steve Goldstein, MarketWatch

WASHINGTON (MarketWatch) — Sales of new homes climbed 6.6% in September, figures released by the federal government on Wednesday showed, representing the second straight month of gains, but still well below the pace when a tax credit existed.
Sales of new single-family homes rose 6.6% to a seasonally-adjusted annualized rate of 307,000, which is stronger than the 300,000 that economists expected in a MarketWatch-compiled poll.
On Monday, a report showed sales of existing homes also were stronger than expected, rising 10%, and the two reports lend support to some economists who believe housing demand hit a bottom in late summer.....

This is very good news! Gosh if we had more of this kind of news, maybe it would build on itself. The birds are chirping, it's a beautiful day, and the sky is blue.BUT WAIT!!! SOMETHING JUST HIT HIM ON THE HEAD!! WHAT COULD IT BE???

....Still, the pace of new-home sales is 21.5% below the same level of last year.
The pace of new-home sales also is considerably below the 414,000 rate in April, when the market was buoyed for a credit for first-time home buyers that has since expired....
Steve Goldstein is MarketWatch's Washington bureau chief.

Dohhhhhh!!!! THE SKY IS FALLING!! THE SKY IS FALLING!!! Now, if we just take a minute here, we would see that that last part is nothing more than a silly pine cone. Of course everything is lower than last year. And yes, sales are off since the tax credit expired. The former is because we hit bottom, and the latter was expected before the credit ever went into place. The current, hard news is that sales are up 6.6%-new homes and 10%-existing homes!!! I think I'm going to go out and enjoy a nice, sunny, improving day. I hope you do too.