This morning’s record low in new home sales is shedding some light on just how bad the housing market is. Although I’ve long expected a double dip, I am actually surprised by how poor the housing data has been in the early portion of this year. At this time of year we are generally beginning to see some improvement in the market, but this number was beyond abysmal. That ugly numbers from this morning:

• 250K annual rate vs expectations of 290K.
• All regions were down.
• This is a record low.
• Median prices fell 14% to $202,100.
• Supply on the market ROSE to 8.9 months.

For Diana Olick at CNBC (one of the absolute very best financial newsreporters around) the news is the nail in the double dip coffin and the risks are mounting. She states:

Unfortunately the cons are going to prevail for a while:

1. Supply supply supply. Too much. Can’t overstate that.

2. Foreclosures. Banks are pushing properties through the foreclosure process at a really rapid pace now. I’m also hearing they may be ramping up sales ahead of any settlement with nation’s attorney’s general over the so-called “robo-signing” paperwork scandal. More foreclosures on the market means more supply and more price pressure.

3. Gas prices: See yesterday’s blog post. It’s real.

4. Mortgage applications. They are way below historical norms. All cash buyers in February rose to a record 33 percent of all buyers of existing homes. Many many Americans simply can’t qualify for a mortgage anymore at a reasonable rate.

5. FHA: Next month the cost of an FHA loan goes up yet again. FHA loan volume dropped 26 percent in February month to month.

6. Consumer sentiment: Awful. No confidence in this market. Only the investors are out in droves, looking for and getting bargains. We need them, but we need real buyers as well.

You think I’m a bear? I’m a realist. I’ve been warning of a double dip for months, as many of you ‘disagreed’ with me on the blog. At the turn of the year, hearing about some energy in the market and some improving sales numbers at least, not prices, I tried to look at the bright side; perhaps things were improving with more jobs and more buyer traffic? You all didn’t seem to like that either. Well I’m calling it like I see it now, and I see a double dip.

Even as gas continues to creep ever higher, removing substantial marginal purchasing capacity from the US consumer, a topic beaten to death previously, the oil exporting cartel remembers that in a world strapped for energy, oil prices can and will be quite sticky. Which is why now that OPEC has had its refreshed taste for $120 brent after a three year hiatus, it will most certainly not let the price of crude drop into double digit territory absent another massive deflationary shock a la the fall of 2008. To wit, OPEC has just announced that $120 oil is an acceptable level and will “not hinder global growth.” Funny – if one pulls OPEC press releases from the summer of 2008, the cartel used verbatim words to describe $150 oil, and its impact on the world economy. Then again, as Dallas Fed’s Fisher pointed out earlier today, commodities are now exposed to the same excess liquidity bubble that took crude to its all time highs. We expect nothing less this time around, especially now that for some inexplicable reason, the world believes that the Fukushima situation is contained and thus the “demand destruction” part of the equation can fall out.

From Reuters:

OPEC believes the oil price is approaching $120 per barrel but unlikely to go higher, a level that is “acceptable” and will not hinder global growth, Iraqi oil minister Abdul-Kareem Luaibi said on Tuesday.

“Global oil prices are moving towards $120 a barrel. We consider this an acceptable price that will not harm global growth,” Luaibi told a news conference in Baghdad. “We think the price will not exceed $120 per barrel.”

Oil prices slipped on Tuesday, with Brent crude falling below $115 a barrel as investors betting prices would rise with Western involvement in Libya took profits in anticipation of a slowdown in air strikes.