Existing Home Sales Rise But New Home Sales Take Sizable Hit
Reports on January sales of both new and existing houses were released this week. Conclusions were, to say the least, mixed.
The National Association of Realtors report on the sales of existing home in
January stated that those sales had hit the highest level in seven months, increasing
to a seasonally adjusted annual rate of 6.48 million units, a 3 percent
increase over the revised figures for December. This was still 4.3
percent below the 6.75 million units pace in January one year ago.
New home sales, however, went in quite a different direction. According to
the joint report of the U.S. Census Bureau and U.S. Department of Housing and
Urban Development, the sales of new homes dropped 16.6 percent
below the revised December rate of 1,123,000 to 937,000. This is 20.1 percent
below the estimated rate in January 2006.
Existing Home Sales
The median price for existing homes, including single-family residences, townhomes, condominiums, and co-ops was $210,600 in January, a drop of $11,000 from revised December figures (which had been the highest since last August.) The January figure was 3.1 percent lower than the median price in January of last year.
Total housing inventory was up 2.9 percent to a supply of 3.55 million existing homes available for sale. This is a 6.6 month supply at current absorption rates, the same as in December. In October inventories reached a peak of 7.4 months supply.
Regionally sales were down 5.6 percent in the West, 4.8 percent in the Midwest, and 2 percent in the South compared to December. Sales figures in the Northeast were unchanged
David Lehreah, NAR's chief economist advised against overreacting to the improved sales figures. "Although we're expecting existing-home sales to gradually rise this year, and buyers are responding to the price correction, some unusually warm weather helped boost sales in January. On the flip said, the winter storms that disrupted so much of the country in February could negatively impact the housing market."
He said that the February storms could skew February figures because, even though the numbers will be seasonally adjusted, the weather was unusually disruptive, causing many closings to be postponed and virtually shutting down buyer traffic in many parts of the country.
New Home Sales
The estimated annual rate of 937,000 new home sales recorded in January was the lowest in at least a year. The previous low in October was 967,000. The West in particular showed heavy erosion in new home sales with an annualized rate of 166,000 units. This was the first time in the 2006-2007 time period that the sales pace dropped below 210,000; sales were off 37.4 percent from revised December numbers and were 50.4 percent below January 2006 figures.
New home sales figures appear to be holding up fairly well, however, there is much anecdotal information about incentives from builders which would not be reflected in the sales price. None-the-less, the median sales price of new homes sold in January was $239,800 and the average price was $313,000. In December the corresponding figures were $239,400 and $298,600; in January 2006 they were $244,900 and $301,000.
At present there are 536,000 new homes for sale nationwide. This is a 6.8 months supply at the current rate of sale. This represents a 19.3 increase in absorption since December and 28.3 percent since January 2006.
The Office of Federal Housing Enterprise Oversight will release quarterly sales figures this week. The "same house" sales report, which compares existing homes over time, may give more perspective to the one month snapshots provided by the NAR and Census reports.