RealEstateEconomyWatch.com Insight and Intelligence on Residential Real Estate
(June 24, 2009 Release)
Highlights
• New home sales fell 0.6 percent in May to an annualized 342,000 units compared to 344,000 annualized units posted in April.
• The slight decrease in sales was disappointing news. New home sales were mixed by region. The sales in the South fell 8.7 percent, while sales in the Northeast, Midwest and West rose by 28.6 percent, 18.6 percent and 1.3 percent, respectively from a month earlier.
• The months supply fell to 10.2 in May from 10.4 in April, but remains at excessive levels.
• The median new home sales price was down 3.4 percent compared to a year ago.
| New Home Sales, Mil., SAAR | ||||
| May 09 | Apr 09 | 3 mo Avg. | 1 yr ago | |
| United States | 0.342 | 0.344 | 0.340 | 0.509 |
| % change | -0.6 | 2.7 | -32.8 | |
| Northeast | 0.027 | 0.021 | 0.022 | 0.031 |
| % change | 28.6 | 5.0 | -12.9 | |
| Midwest | 0.051 | 0.043 | 0.047 | 0.075 |
| % change | 18.6 | -6.5 | -32.0 | |
| South | 0.184 | 0.201 | 0.193 | 0.287 |
| % change | -8.7 | 3.6 | -35.9 | |
| West | 0.080 | 0.079 | 0.078 | 0.116 |
| % change | 1.3 | 5.3 | -31.0 | |
| Months’ Supply | 10.2 | 10.4 | 10.6 | 10.7 |
| New Median Home Price, $ | 221,600 | 212,600 | 212,066 | 229,300 |
| % change | 4.2 | 5.2 | -3.4 | |
Source: Census Bureau; median home price not seasonally adjusted
Analysis
The slight decline in new home sales was disappointing news for the nation’s housing sector and we are reminded that a pace of 342,000 is close to its cyclical low of 329,000 posted in January. All three housing measures-housing starts, existing home sales and new home sales are bouncing slightly upward from their January cyclical lows, suggesting that the housing markets may be nearing a bottom and stabilizing.
The slower pace of new home sales in May was primarily driven by an 8.7 percent drop in the South which has a 54 percent share of total new home sales. The seasonally adjusted new home available for sale in May was 292,000. Inventory levels have been steadily declining over the past year. It appears that the sharp drop in new home construction over the past two years is finally impacting the inventory of new homes in a positive way. Eventually, inventory levels are expected to drop to a level that is consistent with rising new home values. On balance, the May pace of new home sales remains very weak and the supply of new homes remains very excessive, relative to the sales pace. It will take several more months of positive news in the major housing measures before we can claim that a housing recovery is in sight.
