Friday, August 23, 2013

New Home Sales decline sharply to 394,000 Annual Rate in July

by Bill McBride on 8/23/2013 10:00:00 AM

The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 394 thousand. This was down from 455 thousand SAAR in June (June sales were revised down from 497 thousand).

April sales were revised down from 453 thousand to 446 thousand, and May sales were revised down from 459 thousand to 439 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 July 2013 were at a seasonally adjusted annual rate of 394,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 13.4 percent below the revised June rate of 455,000, but is 6.8 percent above the July 2012 estimate of 369,000.
New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply increased in July to 5.2 months from 4.3 months in June.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of Supply This is now in the normal range (less than 6 months supply is normal).
"The seasonally adjusted estimate of new houses for sale at the end of July was 171,000. This represents a supply of 5.2 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.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is near the record low. The combined total of completed and under construction is increasing, but still very low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In July 2013 (red column), 35 thousand new homes were sold (NSA). Last year 33 thousand homes were sold in July. The high for July was 117 thousand in 2005, and the low for July was 26 thousand in 2010.

New Home Sales, NSA

This was well below expectations of 487,000 sales in July, and a very weak report.  I'll have more later today.