new home sales

Home construction drops far more than expected

New home construction hit a record low for January, with all of the country showing declines in home activity.  Analyst are hoping that government foreclosure aid will help stop the decline.  From DallasNews.com:

The Commerce Department reported Wednesday that construction of new homes and apartments dropped 16.8 percent last month to a seasonally adjusted annual rate of 466,000 units. That’s well below the 530,000 units economists expected, and was the slowest pace on records dating back a half-century.

Applications for building permits, considered a good barometer of future activity, also dropped to a record low, falling 4.8 percent to a rate of 521,000 units, slightly below economists’ expectations.

The continued weakness underscored the problems facing the housing industry, which is in the grips of the worst slump in the post-World War II period. Troubles in housing have pushed the country into a recession and also triggered the worst financial crisis in seven decades as banks struggle to cope with billions of dollars of losses in mortgages and other types of loans.

new home sales

New Home Sales Drop 14.7% in Latest Report

The U.S. Census Bureau and the Department of Housing and Urban Development announced today that sales of new, single-family homes in December fell more than 14 percent compared to November’s numbers. The report also showed there is currently a 12.9 month inventory of unsold homes on the market.

Bob Walters, chief economist of the nation’s largest online lender, Quicken Loans, says the report is a disappointment given some of the other factors working in housing’s favor.

“Today’s new home sales report is disappointing given the positive and somewhat surprising existing home sales report from earlier this week,” Walters said. “However, conditions remain favorable for home sales, thanks in large part to falling home prices and mortgage interest rates that continue to hold near historic lows.”

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new home sales

New Home Sales Drop 14.7% in Latest Report

The U.S. Census Bureau and the Department of Housing and Urban Development announced today that sales of new, single-family homes in December fell more than 14 percent compared to November’s numbers. The report also showed there is currently a 12.9 month inventory of unsold homes on the market.

Bob Walters, chief economist of the nation’s largest online lender, Quicken Loans, says the report is a disappointment given some of the other factors working in housing’s favor.

“Today’s new home sales report is disappointing given the positive and somewhat surprising existing home sales report from earlier this week,” Walters said. “However, conditions remain favorable for home sales, thanks in large part to falling home prices and mortgage interest rates that continue to hold near historic lows.”

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new home sales

New home sales plunge to lowest on record

NEW YORK (CNNMoney.com) — Sales of newly constructed homes plunged in December to the lowest level on record, going back to 1963, according to a government report released Thursday.

The U.S. Census Bureau reported that new home sales fell to an annual, seasonally adjusted rate of 331,000 in December. That’s down 14.7% from a revised 388,000 annual rate in November.

The December sales pace was 44.8% below the same month a year ago, when the annual rate of new home sales was 600,000.

Additionally, last month’s sales pace was much lower than the consensus estimate of 400,000, according to economists surveyed by Briefing.com.

Sales are typically slow around the holidays. “This is horrible, but note that December always sees activity drop sharply,” said Ian Shepherdson, Chief U.S. Economist of High Frequency Economics, in a written research note.

But there are also larger, more daunting forces at work. The problem that builders are facing is dirt cheap competition from existing, foreclosed homes.

“You have foreclosures rising and when banks foreclose, they sell those houses at rock bottom prices, and builders just can’t compete in that market,” said Patrick Newport, economist with IHS Global Insight.

The problem is very acute in the West – in particular Arizona, California and Nevada – where home prices have plummeted the most and the foreclosure rates have spiked the highest.

While the number of new homes sold plunged in December, the number of existing homes sold in the month showed a surprise jump, according to a report released earlier in the week. But that bump is largely attributed to a flood of foreclosure sales.

The number of existing homes sold in December rose 6.5% from the previous month, to an annual rate of 4.74 million units, according to a report released Monday from the National Association of Realtors. Plunging home prices – especially extreme foreclosure bargains – brought buyers back into the market. Still, total 2008 sales were down 13.1% from 2007.

The median sales price of new homes – which measures the price at which half of the homes sold for more and half sold for less – was $206,500, down 9% from $227,700 a year earlier. The average sales price was $246,900, 13% lower than the $284,400 average of a year earlier.

At the end of the month, there were a seasonally adjusted 357,000 new homes for sale, which represents an inventory level of 12.9 months at the current sales pace.

For all of 2008, 482,000 new homes were sold, down 37.8% from the year prior. In 2007, 776,000 new homes were sold, according to the report.

Elevated inventory levels of both new homes and existing homes will continue to put downward pressure on new home sales.

“With so many homes for sale on the market, it doesn’t make sense for builders to build another home because he can’t sell it and make a profit on it,” said Newport.  

new home sales

Housing starts post larger than expected drop

2008 was the worst year for builders since 1959.  The Commerce Department’s numbers showed that construction of new homes and apartments dropped over 15 percent in December, overshadowing the new low set in November.  From DallasNews.com:

The Obama administration wants to ramp up efforts to stem skyrocketing home foreclosures, which have dumped even more properties on an already crippled market.

The Federal Reserve has taken a number of extraordinary steps with the hope of providing some relief. It is buying certain types of mortgage securities and has slashed a key interest rate to a record low of between zero and 0.25 percent.

Against that backdrop, mortgage rates have dropped to the lowest level in decades in recent weeks, although rates on 30-year mortgages rose above 5 percent this week, Freddie Mac reported Thursday. Average rates on 30-year fixed mortgages rose to 5.12 percent this week from 4.96 percent last week, which was the lowest since Freddie Mac started its survey in April 1971.

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