Wednesday, March 23, 2011

New Home Sales Fall to Record Low in February

by Bill McBride on 3/23/2011 10:00:00 AM

The Census Bureau reports New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 250 thousand. This was down from a revised 301 thousand in January.

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

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 February 2011 were at a seasonally adjusted annual rate of 250,000 ... This is 16 9 percent 16.9 (±19.1%)* below the revised January rate of 301,000 and is 28.0 percent (±14.8%) below the February 2010 estimate of 347,000.
And a long term graph for New Home Months of Supply:

New Home Months of Supply and RecessionsMonths of supply increased to 8.9 in February from 7.4 months in January. The all time record was 12.1 months of supply in January 2009. This is very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of February was 186,000. This represents a supply of 8.9 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 76,000 units in February. The combined total of completed and under construction is at the lowest level since this series started.

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

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

The previous record low for February was 27 thousand in 2010. The high was 109 thousand in 2005.

This was a new record low sales rate and well below the consensus forecast of 290 thousand homes sold (SAAR). Another very weak report ...

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