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 10/27/08 For Sep 2008 | ||||||||||||
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Highlights
The new home sales report for September, together with last week's stronger report on existing homes, points to the possibility that the sector has bottomed. New home sales came in at a better-than-expected annual rate of 464,000, up 2.7 percent on the month but an improvement offset, though not completely offset, by downward revisions to prior months. The 464,000 rate, nevertheless, marks the first back-to-back sub-500 rates since the '91 recession. In a clear plus, supply is coming down, at 10.4 months for the current sales rate and down from 11.4 months in August. Builders are definitely cutting back as the number of new homes for sale, at 394,000, is the lowest in four years.
The median price, of $218,400, is also the lowest in four years. The rate of price decline, at -0.9 percent month-on-month and -9.1 percent year-on-year, is consistent with price declines underway for existing homes as distressed sales push prices down.
Regional data show improvement for the West where existing home sales also bounced back in September. New home sales have been unusually weak in the Northeast which saw a record low total in September, in data going back to the '70s. It's hard to judge reaction in today's financial markets, but stocks did rally after the report was issued.
New home sales plunged 11.5 percent in August to a 460,000 annual unit rate, a rate comparable to downturns in the early 1990s and early 1980. Sales were especially weak in the West and Northeast. The year-on-year decline stands at 34.5 percent. Supply at the current sales rate rose from 10.3 months in July to 10.9 months -- one of the very highest readings in nearly 50 years of data. Prices fell a very steep 5.5 percent on the month to a median $221,900. The year-on-year decline of 6.2 percent has been steeper during the ongoing downturn but is still one of the very steepest on record.
New home sales Consensus Forecast for September 08: 450 thousand-unit annual rate
Range: 400 thousand to 550 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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