New home sales tank 11.3% in November
* Sales tanked 11.3% to a seasonally adjusted annual rate of 355,000 in November from 390,000 in October. That was well below the average forecast of 438,000 units. Sales fell in three out of four regions -- by 3.3% in the Northeast, 9.2% in the West and 21.1% in the South. They rose 21.4% in the Midwest.
* There were just 235,000 new homes on the market last month. That was down from 240,000 a month prior and the lowest since April 1971. On a months supply at current sales pace basis, inventory rose to 7.9 from 7.2.
* The median price of a new home dropped 1.9% to $217,400 from $221,600 a year earlier.
The new home sales figures didn't bring any similes to Wall Street's face this holiday season. November sales fell much more than expected, hitting the lowest level in seven months. Still, I'm not all that surprised. Some giveback was to be expected given the feared expiration of the tax credit and the pull-forward of some demand. Now that the credit has been extended and expanded, and the economy has improved a bit more, I suspect sales going forward will find support.
Another positive: The supply of new homes for sale continues to fall. We now have fewer new homes on the market than at any time in more than 38 years. There's still plenty of competition from "used" homes, especially distressed property. But even that overhang is gradually coming down. Plus, housing affordability is running at the highest in many years thanks to the price declines we've seen. That should ensure the gradual, anemic recovery in housing will continue into 2010.