Holy Snikes! New Home Sales Fall 40.3%

I had to do a double-take when i saw that number:

Sales of new one-family houses in May 2008 were at a seasonally adjusted annual rate of 512,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.5 percent (±13.7%)* below the revised April rate of 525,000 and is 40.3 percent (±6.9%) below the May 2007 estimate of 857,000.  -Census Bureau

A few data points worth pulling out of this months release:

• May New Home Sales totaled 512k, in line with expectations;
• 512k is the 2nd lowest reading in 17 years (501,000 at an annual pace in March ’08);
• Builders made progress reducing supply: New homes for sale hit a 3 year low of
453,000;

• Completed homes for sale fell the fourth straight month;
• Length of time completed home sat for sale rose to 8.5 months; That’s double  what it took in 2006;
• Months supply rose to 10.9 from 10.7 (the high was 11.4 in March);
• Median price fell to 5.7% y/o/y to $231k, average price fell to $311k;

• Sales of previously owned homes — about 85% of the housing market — scheduled to be released tomorrow at 10 a.m.;

The May sales of new U.S. houses fell 2.5% — less than Estimated average relative standard errors of ±13.7%, and are therefore statistically not significant. The Year-over-year data, at 40.3%, far exceeds the ±6.9% margin of error.

Rex Nutting adds the following caveats:

The figures likely overstate the number of sales, because they don’t
account for canceled sales. The report is based on contracts signed,
not sales closed. Inventories are likely understated because of
cancellations.

Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn’t sure whether sales rose or fell. The standard error in May, for instance, was plus or minus 13.7%. Read the full government report.

The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 541,000 annual pace, 37% slower than a year earlier. In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006.

Good stuff.

New Home Sales, May 2008
New_home_sales_may_2008
Chart courtesy of Barron’s Econoday

>

Sources:

New Res Sales_may_08.pdf
Census HUD, June 25, 2008
NEW RESIDENTIAL SALES IN MAY 2008

New-Home Sales in the U.S. Fell 2.5% to 512,000 Pace in May
Courtney Schlisserman
Bloomberg, June 25 2008
http://www.bloomberg.com/apps/news?pid=20601068&sid=aCIqqaMTVbew&

New-home sales fall 2.5% in May to 512,000 pace
Builders slash prices and further reduce inventories of unsold homes
By Rex Nutting, MarketWatch
Last update: 10:00 a.m. EDT June 25, 2008
http://tinyurl.com/5v6nl6

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