New home sales fall to record low in February
How did the new home market perform in February? Glad you asked. Here are details from the Census Bureau ...
* New home sales dipped 2.2% to a seasonally adjusted annual rate of 308,000 in February from an upwardly revised 315,000 in January. That was slightly below forecasts for a sales rate of 315,000 and the lowest level in 47 years of record-keeping.
* Regionally, sales dropped 20% in the Northeast and 18% in the Midwest. They fell 4.6% in the South, but jumped 20.8% in the West.
* The raw number of homes for sale inched up to 236,000 from 233,000 in January. Compared with a year earlier, supply was down 28%. The months supply at current sales pace indicator of inventory climbed to 9.2 from 8.9. Median prices rose 6.1% to $220,500 from $207,900 a month earlier. On a year-over-year basis, prices were up 5.2%, the biggest yearly gain since September 2007.
What's the story on housing? The market remains stuck in the doldrums, that's what. New home sales slumped to the lowest level since at least 1963, while a key measure of market supply worsened. If there's a silver lining, it's that median prices increased at the fastest year-over-year rate since late 2007. We'll likely see some pick up in the March and April figures as well, with buyers looking to get in before the tax credit expires. The credit-fueled pop won't be anything like what we saw the first time around however.
Stepping back for a minute to look at the big picture, I can't help but point out (again) how affordable housing is. Cheap rates and cheap home prices have restored the affordability that was sorely lacking a few years ago. Core buyers and investors are out there, and they're buying product that's priced right. This is why I don't expect a huge new collapse in the housing market, just more churning near these depressed levels.
* New home sales dipped 2.2% to a seasonally adjusted annual rate of 308,000 in February from an upwardly revised 315,000 in January. That was slightly below forecasts for a sales rate of 315,000 and the lowest level in 47 years of record-keeping.
* Regionally, sales dropped 20% in the Northeast and 18% in the Midwest. They fell 4.6% in the South, but jumped 20.8% in the West.
* The raw number of homes for sale inched up to 236,000 from 233,000 in January. Compared with a year earlier, supply was down 28%. The months supply at current sales pace indicator of inventory climbed to 9.2 from 8.9. Median prices rose 6.1% to $220,500 from $207,900 a month earlier. On a year-over-year basis, prices were up 5.2%, the biggest yearly gain since September 2007.
What's the story on housing? The market remains stuck in the doldrums, that's what. New home sales slumped to the lowest level since at least 1963, while a key measure of market supply worsened. If there's a silver lining, it's that median prices increased at the fastest year-over-year rate since late 2007. We'll likely see some pick up in the March and April figures as well, with buyers looking to get in before the tax credit expires. The credit-fueled pop won't be anything like what we saw the first time around however.
Stepping back for a minute to look at the big picture, I can't help but point out (again) how affordable housing is. Cheap rates and cheap home prices have restored the affordability that was sorely lacking a few years ago. Core buyers and investors are out there, and they're buying product that's priced right. This is why I don't expect a huge new collapse in the housing market, just more churning near these depressed levels.
posted by Mike Larson at
9:53 AM
5 Comments:
"I can't help but point out (again) how affordable housing is"
You must be kidding. I live in the San Jose area, and can't find a decent house (read > 1500 sq ft built after 1960) for a decent price (under $1 million) in any of the cities with a "good school district" e.g Cupertino, Los Gatos, Saratoga
By
Anonymous, at March 25, 2010 at 12:35 AM
So true, Anonymous. Except in the outer suburbs where values have collapsed by 40-60% over the last few years, houses remain unaffordable in the Washington, DC area. Single family homes have generally fallen by less than 10% from their peaks in Washington proper and the inner suburbs.
I think the NAR's measure of affordability is in large part based on these artificially low interest rates we have right now. When (and if) the Fed and Treasury allow mortgage rates to go up - and there are some signs that interest rates on the ten year are starting to move up - the affordability measures will not look nearly so good.
By
Anonymous, at March 25, 2010 at 11:36 AM
Housing prices have a long way to go before they will bottom:
1. Anyone that was credit worthy already purchased a home. When greenspan dropped rates to 1% it pulled a demand forward causing a decade worth of sales to happen in just a few years.
2. Weak Jobs. Real wages continue to fall as companies are still laying off, cutting wages, and cutting worker hours to match weak demand for goods and services. Unemployment will have to decline significantly to see any measurable demand for real estate. Any recent increases are purely gov't gimmicks that quickly fade out.
3. Rising (correct that) "soaring" state and local gov't property taxes, and local and state gov't scramble for dollars to support their bloated budgets.
FWIW: Today is the last day that the fed is purchasing MBS. It will be interesting to see how quickly Mortgage rates will rise without the Fed's support. I think if MBS rates rise above 200 bps, then we'll see the fed go on a second MBS buying binge. Without the Fed buying MBS interest rates would have been much higher and real estate prices would have quickly reached their bottom. The Fed is just delaying and slowing the decline.
By
Anonymous, at March 31, 2010 at 5:22 PM
I usually agree with you Mike but you're wrong about this. I work as a foreclosure and bankruptcy attorney and I'm telling you that the 'shadow inventory' is real and its out there. It's in the millions of properties. They will eventually be released onto the market and it will depress prices further. There's no way it can't. Properties often sit vacant for years before finally appearing on the MLS for rock bottom prices. These properties will continue to drag down prices for years to come.
By
Anonymous, at April 3, 2010 at 6:48 PM
Furthermore, a lot of the current affordability is based upon low money down FHA lending. Remember how well those 'affordibility' products turned out?
Homes in decent areas (in Illinois) are still selling in the $400's. Why? Large numbers of buyers are putting down $20k, which is 5% or less, and taking out mortgages below the $417k conforming limit. How does a guy like me with a $60k down payment on a $300k house compete with a guy who's willing to put down $20k on a $400k house? I can't compete and I'm price out of the good neighborhoods because bozo the clown with government money is willing to pay 45% of his gross income for a mortgage under FHA standards. Prices continue to be ridiculous. I can't wait for the tax credit to expire and the bottom to drop from there.
By
Anonymous, at April 3, 2010 at 7:10 PM
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