New Home Sales Down 33%; Prices Fall 9%
Damn Typepad! I wrote up a new housing post, only to see a system wide typepad crash.
Here's a quick retyped version:
There was some good news in New Home Sales Data, despite those ugly headlines: Inventories continue to slide downwards, as builders slash prices. They fell over 7% for the month alone.
Commerce Department:
Sales of new one-family houses in September 2008 were at a seasonally adjusted annual rate of 464,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.7 percent (±12.1%)* above the revised August rate of 452,000, but is 33.1 percent (±8.9%) below the September
2007 estimate of 694,000.The median sales price of new houses sold in September 2008 was $218,400; the average sales price was $275,500. The seasonally adjusted estimate of new houses for sale at the end of September was 394,000. This represents a supply of 10.4 months at the current sales rate.
One other thing to note: Note the monthly 2.7% increase was based in part on last month's being revised downwards, making the differential look bigger (this month is also likely to be revised downwards). Annualized sales for the month was 464k; Actual unadjusted monthly new home sales are about 35-45k, down from 100-120k (before they get annualized).
New Home Sales, Annualized
Chart via Barron's Econoday
>
Calculated Risk continues to run the best New Home Sales Chart -- the monthly, non seasonally adjusted comparisons with each prior year:
New Home Sales, Monthly, NSA
Chart via Calculated Risk
>
Source:
NEW RESIDENTIAL SALES IN SEPTEMBER 2008
Manufacturing and Construction Division
http://www.census.gov/const/www/newressalesindex.html
PDF
Monday, October 27, 2008 | 11:10 AM | Permalink
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Comments
Bottom = 2012
(Sorry Cramer)
Posted by: Pool Shark | Oct 27, 2008 11:15:04 AM
"Inventories continue to slide downwards, as builders slash prices."
Should read as; builders slash production.
Posted by: Pat G. | Oct 27, 2008 11:26:36 AM
We are doing better than the rest of the world atleast. As I wrote recently, the US is atleast in a slowing downward trend in terms of home prices where this is accelerating in other nations. Troubling times ahead....
Posted by: Andy | Oct 27, 2008 11:30:48 AM
Dude, get Windows Live Writer (free) or Ecto (for a Mac, $18). There's no reason for someone who writes as much as you do to use a web-based interface. Both programs will save your in-progress work, and make it easier to embed images, etc.
Posted by: Jason G. | Oct 27, 2008 11:40:31 AM
I think it is interesting that when home prices were shooting upward, and the dow went from 11k to 14k--there was no inflation. None-nada.
Yet now with home prices merely retracing a portion of gains and year dow at 2002 levels, we have DEFLATION.
Posted by: Hal | Oct 27, 2008 12:11:18 PM
"Upbeat housing news helps ease market fear." MSN money headline, today, now. Bloomberg also reporting the number as a positive thing.
Posted by: bk | Oct 27, 2008 12:13:25 PM
"Damn Typepad! I wrote up a new housing post, only to see a system wide typepad crash."
--
Word:
Never, ever, never do that without saving the elements of the post to some word file.
Posted by: Eclectic | Oct 27, 2008 12:14:41 PM
two interesting things about the chart. first is the relative stability of the 2008 numbers. second, year over year comparisons mean less as we compare them with declining 2007 numbers.
Posted by: bruce | Oct 27, 2008 12:34:44 PM
I typically will put long posts in the Windows clipboard until I know it got through.
Posted by: John Borchers | Oct 27, 2008 12:36:33 PM
seriously Barry that makes two of us. Fortunately I had only written up 2 paragraphs on the housing stuff when I got knocked out. I'm seriously considering moving to WordPress
Posted by: Michael Donnelly | Oct 27, 2008 12:43:18 PM
Hal writes:
"when home prices were shooting upward"
"there was no inflation"
Unless one views the housing asset price increase as inflation. I think this also takes noticing that housing prices translated - through HELOCS, refinancing and seller equity conversion into cash - into years of purchasing at auto dealers, retailers and other forms of consumption. I'm just a civilian, but the inflation/deflation here seems like common sense to me. What am I missing?
Posted by: pmorrisonfl | Oct 27, 2008 12:43:34 PM
pmorrisonfl,
A couple of alternative ways of looking at the inflation/deflation in housing:
1. Consider that as house prices rose (and more importantly, expectations of future prices also rose), owners were in fact experiencing deflation in housing costs. The period cost of housing is Initial Cost (I) + carrying costs (C) - terminal cost (T). I is fixed, C was dropping through refi's, and T was (assumed to be) increasing. The result was a (percieved) decline in housing cost.
2. Consider that an "asset" is really deferred consumption, and what we call inflation and deflation is really just a change in the relative value of current and deferred consumption. By definition, an increase in one is a decrease in the other until we start using an elastic ruler (money) to measure them.
Posted by: Estragon | Oct 27, 2008 1:03:28 PM
Estragon,
Thank you for the perspective.
Summarizing your 1), I write: PC = I+C-T
However, even for the case of the owner who kept their home and only refi'd, I'd add two terms:
PC = I+C+TC+(T-EE)
where TC = transaction cost (always > 0) and
EE = Equity Extraction, with a floor of 0 and a ceiling roughly equal to T-(I+TC).
And for the frequent case where someone (1) sold a home to someone else(2), we have:
PC2 = I1+C2+TC2+EE1
I'd argue that the TC and EE terms wound up dominating the C terms, and that they add up to inflation.
Posted by: pmorrisonfl | Oct 27, 2008 1:32:26 PM
Can we get some clarification on the sampling errors shown below?
"This is 2.7 percent (±12.1%)* above the revised August rate of 452,000, but is 33.1 percent (±8.9%) below the September
2007 estimate of 694,000."
Posted by: Avl Dao | Oct 27, 2008 5:23:48 PM
I tend to agree with Pat G. Real estate here in Cusco (Peru) is entirely out of line with personal incomes. I suspect it's not much better in other parts of developing world.
Ward
Cusco, Peru
BTW - I use Wordpress and am pretty happy with it (www.lifeinperu.com)
Posted by: Ward Welvaert | Oct 27, 2008 6:02:08 PM
For everyone who risks losing a post or an email, one other "trick" -- useful at times when you've forgotten all the good advice above -- is simply to try to "refresh" the page and (when asked) tell the browser to "repost" the data.
Sometimes, it works. Sometimes, not. Ideally, you avoid putting yourself in the situation where you use that trick.
Posted by: wunsacon | Oct 28, 2008 1:51:38 AM
On housing, I wonder whether the "let's slow foreclosure" efforts reduced the supply of existing homes for sale and turned prospective buyers towards the new home inventory.
Posted by: wunsacon | Oct 28, 2008 1:56:13 AM
The seasonally adjusted annual rate of new-home sales did rise, from 452,000 to 464,000. But that is just because the seasonal adjustment factor kicked in. Actual sales in September were estimated at 36,000, down from 38,000 in August.
Posted by: Floyd Norris | Oct 28, 2008 7:08:14 AM
