New-Home Sales Tumble 45%
This is a brutal number: New Home Sales fell last in December 2008 to the lowest level on record — a seasonally adjusted annual rate of 331,000.
Month over month, the drop was 14.7% (±13.9%), and year over year, the collapse was an astounding 44.8% (±10.8%) below December 2007.
If we take the raw sales data (NSA), the level of home sales in 2008 was 482,000, the lowest since 412,000 in 1982, the WSJ reported.
Other data points:
▪ The median sales price of new houses sold in December 2008 was $206,500;
▪ The average sales price was $246,900.
▪ Seasonally adjusted estimate of new houses for sale = 357,000, a supply of 12.9 months at the current sales rate;
▪ This inventory to sales ratio is a new all time high dating back to at least 1963.
▪ 482,000 new homes were sold in 2008, a decrease of 37.8% (±2.7%) below the 2007′s 776,000;
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Monthly New Home Sales (NSA) 2003-08
via Calculated Risk
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Sources:
New Home Sales in December
The Census Bureau, Bloomberg, Jan. 29 2009
http://www.census.gov/const/newressales.pdf
U.S. New-Home Sales Fell in December to Lowest Level on Record
Bob Willis
Bloomberg, Jan. 29 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=alipKvn3NBxg&
New-Home Sales Tumbled in December
BRIAN BLACKSTONE and JEFF BATER
WSJ, JANUARY 29, 2009, 10:15 A.M. ET
http://online.wsj.com/article/SB123323520291728517.html
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January 29th, 2009 at 11:17 am
This is really good news. Once he over-extended new home builders are taken out of the marketplace (and those zombie firms declare bankruptcy), we’ll get a lift in sales of exiting homes, a bottom in bad construction loans and a healthier housing market. Remember that the last-to-be-built new homes are the flimsiest of deals and thus most predictable to fail.
January 29th, 2009 at 11:56 am
Yes this is bad, but is it not also good. We must rid ourselves of excess inventory to get at the general excess. Seems to me that that this is more evidence of moving in the right direction.
January 29th, 2009 at 12:50 pm
yes … good news to all .and we know that … new home builders are taken and sold.. nice for all of you… nice selling… keep it up
January 29th, 2009 at 1:02 pm
To quote Schiff from a few years back. ….they keep building the damn things.
January 29th, 2009 at 1:23 pm
Still no BKs of big national builders? Either they made incredible profits during the boom or the tax clawbacks are more than we can imagine or our whole homebuilding business was carried on the backs of off-the-books Mexicans who are no longer getting paid.
January 29th, 2009 at 1:24 pm
ok, long-time lurker has a question: we have 60K in a bank (one of the 2big2fail), and we are considering buying a house using most of that as a down payment. bad idea? i mean, if we get inflation, being a debtor is good, right? and cash in the bank in that situation is losing value every day.
what about deflation? i’m not clear that cash is any better, but being deep in debt prolly is :) not looking for financial advice, just a nod that my head is on straight about those generalities.
of course, i’m not convinced our bank will be here in 3 months to loan us anything… the irony being if we wait long enough, most of the houses we’re looking at now will be cheap pickings in foreclosure.
January 29th, 2009 at 1:27 pm
oh, and wally: i lived in phoenix during most of the boom there. #1 and #3 are most certainly correct.
January 29th, 2009 at 2:04 pm
It’s going to be a long long time before that inventory clears. Home ownership was at all time highs 68-70% historically it has been sustained closer 60% That is a lot of people owning homes that should not be owning homes. It’s pop growth that creates sustainable demand, and pop growth doesn’t change overnight.
Home ownership shrinkage , coupled with the boomers generally downsizing since they have empty nests, means that this has a long long ways from recovering.
January 29th, 2009 at 5:17 pm
xnycpdx:
Inflation is good for debtors, deflation is bad. My advice–keep your cash, if only because it is still the most liquid asset you can own. Deflation is good for cash. If inflation rears up, you can then buy whatever asset class is rising as a result (food comes to mind).
Somewhat paradoxically, inflation will be bad for home prices, which are really more a function of interest rates than anything else, and nominal interest rates generally go up w/ inflation, even if they almost always turn negative on a real basis.