New home sales collapse 10.2% in January to record low
In the wake of yesterday's dismal existing home sales figures for January, we received awful new home sales figures today. The details can be found below ...
* 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.
* 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.
posted by Mike Larson at
9:55 AM
3 Comments:
I think that your alarmist language is creating the wrong impression. Better language might be that ..."market forces wring out more of excessive housing prices". This might help people realize that the problem started back when housing prices were going up, and not just when housing prices were going down. The speculative increases of the housing market made this reduction inevitable. And by most measures, we have another 30% decrease needed to bring housing prices inline with where they should be.
By
Anonymous, at February 27, 2009 at 2:56 PM
I see two things happening. One is price going down. The other is demand going down. The only possible course of action until demand goes back up is for the price to continue going down. This is glorious for me, as I don't own a home, and would like one cheap. I don't feel for you though if you put all your investments into a house. Diversification is a lesson best taught the hard way.
By
Havvy, at February 28, 2009 at 3:06 AM
Prices were artificially inflated way beyond our flat-lined income. How else did anyone expect this to end? We don't just need jobs, we need wages and salaries commensurate with 30% of our home costs, whether renting, but especially home-buying, which carries so many other expenses over renting. Obama's mortgage rescue takes earnings into account in setting price and payment terms. How refreshing, about time!
By
V Cubed, at March 1, 2009 at 7:53 AM
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