Holy Snikes! New Home Sales Fall 40.3%

Wednesday, June 25, 2008 | 11:00 AM

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

Wednesday, June 25, 2008 | 11:00 AM | Permalink | Comments (22) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8341c52a953ef00e5538b5c668834

Listed below are links to weblogs that reference Holy Snikes! New Home Sales Fall 40.3%:

Comments

Here in SoCal, median home price to household income is still around 6!!

Even here near LALA Land, where prices are always higher than the avg market, the normal ratio is around 4. In sane housing markets, it would be around 2.5.

We've got a long way yet to fall.

Posted by: Alaskan Pete | Jun 25, 2008 12:32:25 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner