New Home Sales: Down 48.2%
Some very ugly data today on New one-family house sales for January 2009.
The seasonally adjusted annual rate of 309,000 — a record-low. (The December data was revised downwards to 344,000 unit sales).
The month over month data at down 10.2% was not statistically significant given the margin of error of ±15.4%. The year over year data is an astonishing contraction of 48.2% (±6.8%) below January 2008′s 597,000 sales. Approximately 342,000 new houses for sale at the end of January, representing a 13.3 month supply.
Median price fell 13.5% year over year, and dropped 10% sequentially (monthly).
Rex Nutting adds that the drop in January took place “despite a record drop in prices.”
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Source:
NEW RESIDENTIAL SALES IN JANUARY 2009
U.S. Census Bureau and the Department of Housing and Urban Development.
February 26, 2009
http://www.census.gov/const/newressales.pdf
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February 26th, 2009 at 10:26 am
Price dropped from 223k to 201k….
Yep, as the NAR commercials say…now is a great time to buy a home, unless you want the value to drop 9.87% in one month…
February 26th, 2009 at 10:34 am
As one of the builders said, they cannot compete with the REO’s.
February 26th, 2009 at 10:43 am
I think there’s three major things that were overlooked in the housing bubble. Location, Location and Location. All the houses built in Razed Cornfields on the edge of civilization are suddenly way less desirable now that the chances of reselling them after a few years of appreciation is nil. Anyone can live in the middle of a pit for a few years if they know theres some other sucker that will come along and pay you extra for your time doing it. Now all that hope is gone, and people are waking up every morning thinking I hate this place!
February 26th, 2009 at 10:43 am
All those capitalists who bought houses after prices were down 5% are going to get their timepieces spiffed (clocks cleaned.)
We’ll be talking about the ‘echo-closures’ of 2008/9 financings in 2011.
February 26th, 2009 at 10:43 am
I believe some of this stimulus money should be targeted towards community garden development. Both eduction and production of local food might come in handy down the road…
February 26th, 2009 at 10:51 am
@ bman
so true
February 26th, 2009 at 10:54 am
Barry, we know all of this already?
Everyone knows that this market is only for traders? So how does the average guy invest for the future. Or is there no future?
I’ve said this before but where does the investor go now? I suspect that there are Trillions of Dollars and Billions of people sitting in cash waiting for an answer to this question and that the correct answer could make a lot of money. Invest now? No leave it to you guys and keep my money in cash. thanks!!
February 26th, 2009 at 11:00 am
This has to be good news. Building fewer McMansions means the inventory of homes will grow more slowly. After all we all know that the Option-ARM and Prime McJumbo foreclosure wave is still out there ahead of us.
A couple of days ago I wondered if we would see a panic buying rally in crude once the inventories declined. Looks like it is here today.
February 26th, 2009 at 11:03 am
I wonder how much of the decline is related to buyers waiting for clarity on new gov’t legislation as well as further declines in rates.
I chuckle at some of the comments above. Down 9% in a month; that’s a day in the stock market. Are we now buying homes for a month? The more important point is where prices will be in 10, 15, 20 years assuming we’re not all flippers now. :-)
February 26th, 2009 at 11:03 am
Where are the bankruptcies of the homebuilders? Somebody has some loans on their books to these guys that are still “performing”.
The WSJ had an interesting article on Maicopa AZ in last Sat’s edition. This town had been prev profiled by Time or Newsweek as a disaster. Some homeowners that had purchased a few years ago at$213M w/ a $50m downpayment, were still making their payments. However, there are similar homes for sale for $50M in the same town. When these people finally wake up, they will use jingle mail and I wonder how many others are in similar situations. Batten the hatches, the storm is coming!
February 26th, 2009 at 11:04 am
Sorry, it’s Maricopa. The 7 inces of snow in my yard in western Wa has me befuddled.
February 26th, 2009 at 11:07 am
I, too, have noticed a lack of HB BKs. I find that odd.
February 26th, 2009 at 11:18 am
with HOV stock < $1.00 folks are definitely expecting the company go belly up
February 26th, 2009 at 11:25 am
the less new homes built the better. Hopefully prices will continue to come down to soak up the excess inventory within the next 3 years or so. I just hope the gov’t doesn’t actually find a way to prop up the prices (I don’t think this new plan will work) so we can get to a housing bottom in 3-5 years versus 10.
February 26th, 2009 at 12:02 pm
bman Says:
February 26th, 2009 at 10:43 am
I think there’s three major things that were overlooked in the housing bubble. Location, Location and Location.
……..Couldn’t agree more……these numbers get skewed by places like LV and Miami….I currently involved in a little arm wrestle with my town’s assessor after the state mandated five year revaluation. He’s claiming no decline in prices over the last year….and my home has tripled in value since 1999…..Nice if true
……As several point out above new single family home construction has fallen to around half a million units a year…….this is a incredible contraction which is going to assist considerably in reducing inventory over the next few years……..there’s going to be no housing boom but in most parts of the country the housing bust is bottoming.
February 26th, 2009 at 12:30 pm
@Mr. Obvious and others…it was just reported CP Morgan closed its doors this morning. Second largest home builder here in Indiana.
February 26th, 2009 at 12:30 pm
i’m curious – while the housing bust might be bottoming out in some places, isn’t it going to be temporary? if things are as bad as many commenters here, at cr and other sites are right, further economic slowing will result in more job losses for a start… meaning more mortgage defaults and foreclosures, which means lower house prices. which means more bank problems.
sort of like when wile. e. coyote drops off a cliff and lands on a ledge… only to be hit by the falling piano.
February 26th, 2009 at 12:33 pm
Barry, seen this?
http://www.businessinsider.com/manhattan-condo-inventory-is-soaring-2009-2
Unsold Manhattan Condos Are Piling Up
February 26th, 2009 at 12:33 pm
link to CP Morgan story :
http://www.wibc.com/news/Story.aspx?ID=1066708
they built lots of those houses in cornfields someone spoke of in an earlier post…our first house was one. got out of it a few years ago, luckily, for a better location.
February 26th, 2009 at 12:38 pm
@ otto
builders can’t compete against REO’s- that’s what is going on. When the supply of bank owned properties starts diminishing that is when the bottom will be in.
February 26th, 2009 at 1:04 pm
bman hit it on the head.
Larster, Maricopa is an interesting animal. 20 miles out of civilization, with one road in or out over the reservation. One traffic accident means your commute just went from 45 minutes to over 1:45. Outside of retail a a few odd manufacturing jobs, there is no business there whatsoever. It was flippers paradise a few years ago, could still get a 1500 sq. ft. house for under $200K in the overheated Phoenix market. Half of the houses were empty – like stocks made out of wood sticks and plaster instead of printed on paper. The fundamentals just never made sense to me on it. I have a friend who bought there last year. Poor sucker. I bought in a part of the City of Phoenix, just north of the reservation, before the boom. We call it the world’s biggest cul-de-sac, but at least there are six roads out! An article in the paper last week shows my zip code having lost 22% from the peak. Maricopa well more than 50%. When I bought my house, Maricopa was still just the speed trap between the SE Valley and San Diego. Looks like it might regain that status soon. Seems that location still is important, especially when there’s still plenty of land to go around, like in the desert here. If the town council is smart, they’ll turn the place into a retirement community. The good thing about Arizona and the Inland Empire is that you can have a place like Maricopa do OK as a snowbird retirement community. If not, it’ll literally be a ghost town year round, not just in the summer.
February 26th, 2009 at 1:06 pm
“I wonder how much of the decline is related to buyers waiting for clarity on new gov’t legislation”
More likely the decline is related to buyers clarifying their lack of employment.
February 26th, 2009 at 1:53 pm
The pendulum swings can be harsh. All you need to know about markets, real estate and otherwise, is what Sir Isaac Newton taught you about equal and opposite reactions for every action.
But this is actually good news. Nothing will get better unless it’s first allowed to get worse.
February 26th, 2009 at 2:13 pm
call me ahab Says:
February 26th, 2009 at 12:38 pm
@ otto
builders can’t compete against REO’s- that’s what is going on. When the supply of bank owned properties starts diminishing that is when the bottom will be in.
…..Stick with the generalizations…..There isn’t one housing market there are hundreds of them as my little personal anecdote illustrated……Sure they are going to be going down in the Inland empire or LV for a while but that isn’t true of Seattle or Darien….In most of the country the housing market is going to be stabilizing by the end of this year…… no boom but it will have bottomed out and even showing some modest improvements in some places.
February 26th, 2009 at 3:10 pm
I’ll take some of whatever Otto is smoking. If you think Darien or Seattle will ‘bottom’ by the end of this year, find a way to trade it. I’ll take the other side of that trade all day long.
February 26th, 2009 at 4:21 pm
At that speed at least the new housing sales bust will have to be done in a year. I mean you cannot go any lower than 0 sales of new houses. However, at that point we may have several thousand years of inventory. On a more serious note I do find it surprising that even with such a dramatic fall in both prices and rates it keeps going straight down. Maybe people were waiting for the stimulus bill. It should begin to flatten out by summer.
February 26th, 2009 at 7:03 pm
@ phillipat
“I suspect that there are Trillions of Dollars and Billions of people sitting in cash waiting for an answer to this question and that the correct answer could make a lot of money.”
I do not know about you, but for me it is about wealth preservation at this time. So I am 25% T-bill index fund, 25% commodity index fund, 25% dollar short fund and 25% cash.
February 26th, 2009 at 8:34 pm
Sure millions are sitting on cash, it’s too bad it will be worthless. Global recessions are wicked! I really doubt there are billions sitting on cash. I suspect most are figuring out how to steal taxpayer money. Steal from tomorrow to pay for today. Face lifts, hummers, and 4000 sqft in a corn field.
Average income vs average home prices demonstrate most will still have trouble affording a home especially with jobs evaporating. That’s figuring most have some existing debt and little to put down. Ya think? Not to mention you have an overhang of way too much inventory.
Jobs created by borrowing money from China and running printing presses isn’t going to “make a lot of money” for anybody. Not to mention that bill is going to YOUR children.
The only silver lining in this mess is that other countries drank our Kool Aid!
Shout out to Santelli! Thank you brother! That rant was awsome!