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 2/27/08 For Jan 2008 | ||||||||||||
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Highlights
New home sales continue their plunge, down 2.8 percent in January to a 588,000 annual rate for a year-on-year decline of 34 percent. For perspective, the 588,000 rate is among the very the lowest since the 1991 recession. The year-on-year decline is actually a small improvement from November and December but the rate is nevertheless near the 40 percent level last seen in the recessions of the early 80s.
Prices now appear to be coming apart, down 4.3 percent in January alone following a 9.3 percent plunge in December. The year-on-year decline is at 15.1 percent -- this is a record for the series which goes back to the early 60s. Supply is swollen, at 9.9 months and the highest of this housing slump and the worst since the recessions in 1991 and the early 80s.
It's often hard to gauge housing data during the winter months because of course of weather effects. But there's no doubt that this report, along with other data, points to severe contraction in the nation's housing sector. The drop in home prices point to rising troubles for homeowners. This pressure will spill out across different sectors of the economy, from construction to retail.
New home sales dropped a monthly 4.7 percent in December to an annualized sales pace of 604,000, putting the year-on-year decline at 22 percent. The supply of unsold homes edged up to 9.6 months, up from 9.4 months in November and the worst reading in 27 years.
New home sales Consensus Forecast for January 08: 0.600 million-unit rate
Range: 0.580 million to 0.630 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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