New home sales collapse 10.2% in January to record low
* New home sales collapsed 10.2% to a seasonally adjusted annual rate of 309,000 from 344,000 in December. That was worse than the average forecast of economists surveyed by Bloomberg, who were looking for a reading of 324,000, and the worst level in U.S. history. The data goes back to 1963.
* The raw number of homes for sale continued to decline, falling by 3.1% to 342,000 from 353,000 in December. The months supply at current sales pace indicator of inventory ballooned, however, hitting 13.3. Tht was up from 12.2 in December and the highest reading ever.
* The median price of a new home dropped 9.9% to $201,100 from $223,200 in December. That was also a decline of 13.5% from $232,400 in the year-earlier period. New home prices are now at the lowest level since December 2003 ($196,000).
We got a real one-two punch of dismal housing data this month, with today's new home sales report looking just as ugly as yesterday's existing home sales release. Not only did the pace of sales fall to the lowest level since at least 1963, but a key measure of supply exploded to a record high. The raw supply of homes for sale is clearly dropping. But because sales are falling even faster, we're not seeing any net improvement in the market. Result: Prices continue to fall, with new homes now going for the least in more than five years.
It really does all come down to jobs, jobs, and jobs. Lower mortgage rates are nice. Tax cuts are nice. But with the labor market deteriorating so sharply, we're unlikely to see a meaningful improvement in the housing market. If anything, sales and pricing will deteriorate further.