Tuesday, July 26, 2011

New Home Sales in June at 312,000 Annual Rate

by Bill McBride on 7/26/2011 10:00:00 AM

The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 312 thousand. This was down from a revised 315 thousand in May (revised from 319 thousand).

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 June 2011 were at a seasonally adjusted annual rate of 312,000 ... This is 1.0 percent (±12.5%)* below the revised May rate of 315,000, but is 1.6 percent (±14.1%)* above the June 2010 estimate of 307,000.
New Home Sales and RecessionsClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

Months of supply decreased to 6.3 in June from 6.4 months in May. The all time record was 12.1 months of supply in January 2009. This is still higher than normal (less than 6 months supply is normal).

New Home Months of Supply and Recessions
The seasonally adjusted estimate of new houses for sale at the end of June was 164,000. This represents a supply of 6.3 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."
NHS InventoryStarting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale fell to 60,000 units in June. 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 June 2011 (red column), 29 thousand new homes were sold (NSA). The record low for June was 28 thousand in 2010 (following the expiration of the homebuyer tax credit). The high for June was 115 thousand in 2005.

This was below the consensus forecast of 321 thousand, and was just above the record low for the month of June - and new home sales have averaged only 300 thousand SAAR over the 14 months since the expiration of the tax credit ... moving sideways at a very low level.

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