New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 12/28/07 For Nov 2007 | ||||||||||||
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Highlights
Today's new home sales report will raise new questions on the depth of the housing slump. The annual unit sales rate for new homes fell 9.0 percent to 647,000 in November, the lowest level since 1995. Data for the prior three months were revised lower. The year-on-year level of sales is breaking down, now at -34.4 percent. Supply on the market is at 9.3 months, up from 8.8 months. Supply a year ago was at 6.5 months.
Despite the swollen supply and the huge year-on-year sales decline, prices are stable at a median $239,000 for a 4.2 percent month-to-month improvement and only a slight 0.4 percent year-on-year decline. Prices for existing homes have been weaker showing a 5.1 percent year-on-year decline in October. The existing home sales report for November will be released Monday.
The regional breakdown for new home sales shows severe November declines in the Midwest and Northeast, perhaps a reflection of heavy weather in the month. But year-on-year the declines are roughly even with all regions down about 30 to 40 percent. Treasury yields dipped in initial reaction to the report.
New home sales rebound in October to an annualized pace 728,000, but October sales were coming off a steeply downward revised 716,000 in September that marked a nearly 12-year low. The supply of unsold new homes improved slightly but remains glutted at an 8.5 month supply compared to 9.0 months in September. Existing home prices are weak as indicated by a nearly 9 percent plunge in October for a year-on-year decline of 13 percent. Until home sales pick up, we can expect new home construction to remain depressed. It may be a little early to see much of an effect yet, but the Fed's interest rate cuts in September and in October could start impacting sales as soon as November - but only modestly since it is still so early since the cuts.
New home sales Consensus Forecast for November 07: 0.720 million-unit rate
Range: 0.700 million to 0.730 million-unit rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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