Thursday, February 24, 2011

New Home Sales decrease in January

by Bill McBride on 2/24/2011 10:00:00 AM

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 284 thousand. This is down from a revised 325 thousand in December.

New Home Sales and RecessionsClick on graph for larger image in new window.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000 ... This is 12 6 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000.
And a long term graph for New Home Months of Supply:

New Home Months of Supply and RecessionsMonths of supply increased to 7.9 in January from 7.0 months in December. The all time record was 12.1 months of supply in January 2009. This is still high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. This represents a supply of 7.9 months at the current sales rate.
On inventory, according to the Census Bureau:
"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."
Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

Distressing GapThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale fell to 78,000 units in January. And the combined total of completed and under construction is at the lowest level since this series started.

This is the "good" news - in most areas the 'completed' and 'under construction' inventory of new homes is fairly lean.

New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In January 2010 (red column), 19 thousand new homes were sold (NSA). This is a new record low for the month of January.

The previous record low for January was 24 thousand in 2009 and 2010.

This was below the consensus forecast of 310 thousand homes sold (SAAR).

New home sales have averaged 293 thousand per month (annual rate) over the last nine months - all below the previous record low. Another very weak report ...