New Home Sales Remain Depressed
The Census Bureau and the Department of Housing and Urban Development released their New Home Sales report this morning. According to the report:
“Sales of new single-family houses in September 2010 were at a seasonally adjusted annual rate of 307,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. this is 6.6 percent above the revised August rate of 288,000, but is 21.5 percent below the September 2009 estimate of 391,000”.
Despite the fact that new home sales are up month-over-month, the year-over-year number is far more telling. We are 21.5 percent below where we were a year ago, and I’ll remind you that September 2009 was not exactly a banner month for the housing market. As a matter of fact, we are only slightly above the all-time record low for new home sales. This is another bad showing for the housing market.
The supply of new homes did decrease from 8.6 months of supply in August to 8 months of supply in September. Normally there is about 6 months of supply in a normal market. The reduction of supply is a good thing, but supply is still very high from a historical perspective. Additionally, new homes sales currently comprise only about 10 percent of the market, so any gains here have a relatively minor effect on the market as a whole. Only when we start clearing the glut of existing homes from the market will a housing recovery begin in earnest.