by Bill McBride on 10/27/2008 10:00:00 AM
Monday, October 27, 2008
According to the Census Bureau report, New Home Sales in September were at a seasonally adjusted annual rate of 464 thousand. Sales for August were revised down slightly to 452 thousand.
Note that the most recent wave of the credit crisis started in mid-September. Since New Home sales are reported when the contract is signed, September sales were only partially impacted by the credit crisis.
Click on graph for larger image in new window.
The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).
Notice the Red columns for 2008. This is the lowest sales for September since 1981. (NSA, 36 thousand new homes were sold in September 2008, 28 thousand were sold in September 1981).
As the graph indicates, sales in 2008 are substantially worse than the previous years.
The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales have fallen off a cliff.
Sales of new one-family houses in September 2008 were at a seasonally adjusted annual rate of 464,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.And one more long term graph - this one for New Home Months of Supply.
This is 2.7 percent above the revised August rate of 452,000, but is 33.1 percent below the September 2007 estimate of 694,000.
"Months of supply" is at 10.4 months.
Note that this doesn't include cancellations, but that was true for the earlier periods too. Sales are falling quickly, but inventory is declining too, so the months of supply is slightly lower than the peak of 11.4 months in August 2008.
The all time high for Months of Supply was 11.6 months in April 1980.
And on inventory:
The seasonally adjusted estimate of new houses for sale at the end of September was 394,000. This represents a supply of 10.4 months at the current sales rateInventory numbers from the Census Bureau do not include cancellations and cancellations are falling, but are still near record levels. Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels.
As I noted a couple of months ago, I now expect that 2008 will be the peak of the inventory cycle for new homes, and could be the bottom of the sales cycle for new home sales. But the news is still grim for the home builders. Usually new home sales rebound fairly quickly following a bottom (see the 2nd graph above), but this time I expect a slow recovery because of the overhang of existing homes for sales (especially distressed properties).
This is a another very weak report.