New One Family Home Sales: Ugly!

New Single Family Homes Sold in U.S:

Source: Census Dept.

The Census Department released their New Home Sales data, and it warn't none too purty: Sales of new one-family houses in November 2007 fell to a 12-year monthly low. The seasonally adjusted annual sales rate was 647,000, far below the consensus of 720,000. As expected, October sales were revised downwards.

This is down 9% from October's levels. Year over year, November '07 new-home sales were 34.4% lower than November 2006. That's the largest year-to-year decline since 35.3% in January 1991.

New Home Sales are a measure of contract signings, and do not reflect canceled contracts. Actual numbers are likely lower, as cancellation rates have been running as high as 40%.

The WSJ noted that "the median price of a new home decreased by 0.4% to $239,100 in November from $240,100 in November 2006. The average price advanced by 0.5% to $293,300 from $291,800 a year earlier. In October this year, the median price was $229,500 and the average was $307,900."

Of course, these reported prices don't reflect the REAL price, as homebuilder incentives and giveaways do not show in this data. Builders have been throwing in free granite counter tops, high end appliances, swimming pools, even cars as incentives.

The inventory estimates of new houses for sale at the end of November decreased 1.8% to 505,000 -- but because sales dropped even faster, inventory of unsold homes jumped to 9.3 months at the current sales rate.

Margin of error/confidence interval

One Final note: The monthly drop of 9.0% is below the Census Bureau's ±13.9%* confidence interval. When the reported data point includes zero (as it does in this instance), then the Census Bureau states "it does not have sufficient statistical evidence to conclude that the actual change is different from zero." In other words, the monthly data is not meaningful.

As to the year-over-year change of 34.4%, the confidence interval of ±7.9% does not include zero. Therefore (in Census Bureau lingo), there is sufficient statistical evidence to conclude that an actual change occurred.

Sources:
NEW RESIDENTIAL SALES IN NOVEMBER 2007 (PDF)
U.S. Census Bureau and the Department of Housing and Urban Development.
FRIDAY, DECEMBER 28, 2007 AT 10:00 A.M. EST
http://www.census.gov/const/www/newresconstindex.html

Chart, New Single Family Home Sales
U.S. Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr051.html

Sales of New Homes in U.S. Dropped 9% to 12-Year Low
Bob Willis
Bloomberg, December 28, 2007
http://www.bloomberg.com/apps/news?pid=20601087&sid=avSocBDuTgnw&

New-Home Sales Tumbled 9% Amid Falling Prices in November
JEFF BATER
WSJ, December 28, 2007 10:20 a.m.
http://online.wsj.com/article/SB119884885661555567.html

Comments

[erniem:]

Well, oddly, if you factor out the insanely low interest rates that drove the market for five years, sales are not that bad. Just down from the peak driven by the lowest rates in forty years.

2007 Dec 30 02:07 PM

[YGMMLMM:]

Sales are not down, they are going back to normal!

2007 Dec 31 05:51 PM

[tcsnetwork:]

Sales are anything but normal!!
This market needs to come back to normal market fundamentals

We are not anywhere near the bottom, ARM resets next year will make the subprime mess look small.

2007 Dec 31 07:57 PM