May New home sales lowest since at least 1963
Capturing the post home buying tax credit world, May New Home Sales, a measure of contract signings of new homes, was a disaster at 300k annualized, 27% below estimates and April, which included the credit, was revised down by 58k. The May sales level of 300k is the lowest since at least 1963. The drop sent months supply to 8.5 from 5.8 in April, the highest since June ’09. The area with the biggest foreclosure rate and thus greatest competition to the home builders, the West, saw sales fall 53% m/o/m. The median home price fell 9.6% y/o/y and 1% sequentially. Bottom line, we knew there would be a large post tax credit drop in sales but the degree is obviously big. The question though for the industry is not this data but what happens after the hangover runs its course. Either way, the distortion of steroid shots into the marketplace has only made long term planning and thus efficiently allocated capital that much more difficult to coordinate.
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June 23rd, 2010 at 11:45 am
Talk a little more about long term planning and whether to own real estate or not, if you wouldn’t mind. Obviously there are some deals to be had in real estate, both commercial and residential. What is the risk to the downside?
June 23rd, 2010 at 2:21 pm
[...] knew there would be a large post tax credit drop in sales but the degree is obviously big,” says Miller Tabak’s Peter Boockvar. Beyond today’s data, he wonders what will happen in the [...]