New home sales implode in May, hit record low
* New home sales collapsed a whopping 32.7% in May after jumping 14.7% in April. That left the seasonally adjusted annual rate at 300,000, compared with a revised 446,000 in April and a consensus forecast of 410,000. That is the lowest level in the history of the data, which goes back to 1963. Regionally, sales dropped 23.9% in the Midwest, 25.4% in the South, 33.3% in the Northeast, and a whopping 53.2% in the West.
* The raw number of homes for sales slipped slightly to 213,000 from 214,000 in April. That's the lowest level going all the way back to November 1970. Compared with a year earlier, inventory was down 26.8%. The months supply at current sales pace indicator of inventory surged to 8.5 from 5.8. That's the highest since June 2009.
* Median prices fell 1% to $200,900 from $202,900 in April. On a year-over-year basis, prices tanked 9.6%, the biggest such drop since July 2009.
The May new home sales figures were so awful, I'm at a loss for words. Sales imploded by almost a third, with a whopping 53% plunge out West. While raw inventory held steady at the lowest level in almost four decades, prices dropped by almost 10% from a year ago as demand cratered. That's the biggest drop in almost a year.
We all knew there would be a housing hangover from the expiration of the tax credit. But this decline takes your breath away. Something else is at work, and it's the labor market. We simply aren't creating private sector jobs in this country, and until we start doing so, we're not going to see healthy housing demand. No wonder builders are getting much more pessimistic, construction activity is dropping, and lumber prices are taking an Acapulco cliff dive!