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 4/24/08 For Mar 2008 | ||||||||||||
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Highlights
March's new home sales report is perhaps the most alarming yet of the housing recession, falling 8.5 percent from February to an annual rate of 526,000 -- the lowest rate since 1991. The year-on-year decline of 36.6 percent is the worst since 1981. Houses for sale fell back slightly in the month to 468,000 but when compared against the sales rate shows 11.0 months of supply, up from 10.2 months in February for the most bloated reading since 1981. Prices are plunging, down 6.8 percent in the month for a 13.3 percent year-on-year decrease -- the steepest decline since 1970.
Treasury yields fell as did the dollar and stocks in immediate reaction to these results, which may very well cut off talk that the Federal Reserve is ready to step back from further rate easing. These numbers are a reflection of the credit squeeze which is keeping down financing for home buyers. Declining home values will raise foreclosures further and will further hurt consumer confidence at a time when the jobs market is weak and gas and food prices are soaring.
New home sales are showing no signs of improvement and actually continue to spiral downward as sales weakened again in February to a 13-year low, down 1.8 percent to an annual rate of 590,000. This puts new home sales at a 29.8 percent year-on-year decline that offers no signal of improvement in the housing sector. Like existing home sales, inventory overhang is still a major problem. Supply on the market held unchanged in February at a 27-year high of 9.8 months.
New home sales Consensus Forecast for March 08: 580 thousand-unit annual rate
Range: 560 thousand to 600 thousand-unit annual 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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