September New Home Sales Report is Modestly Upbeat
There was the tiniest ray of sunshine in the September New Residential Sales Report issued on Thursday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Good news is usually relative but in the current environment most of us take
what we can get and the news that new home sales in September
were at a seasonally adjusted annual rate of 770,000, an increase of 4.8 percent
over the revised August rate of 735,000 will certainly be greeted with some
relief even though the latest figure is still more than 23 percent below the
September, 2006 sales pace of 1,004,000.
And it was only one region that did the heavy lifting during the month. The
West had an increase of 37.7 percent in sales during the month
when compared to August for an annualized rate of 223,000 homes. Only the South
also came in positive - and then barely - with an increase of 0.5 percent for
the month. Sales in the Midwest were down 19.8 percent from August and the Northeast
was off 6.6 percent.
Surprisingly, in the face of rumors of builder give-aways in the form of free upgrades, price cuts, and other concessions, the median price of homes continues to rise. The median price of a new home sold in September was $238,000 compared to $232,000 in August and $226,700 in September 2006. The average price, however, is falling. The one year ago it was $296,200 which rose to $329,400 last March. By August 2007 the average was down to 297,000 and last month stood at $288,000.
At the end of September there were an estimated 523,000 homes on the market; this is, at the current rate of attrition, a supply of 8.3 months. In August there was a 9 month backlog of unsold houses and in September of 2006 the supply was ample for 6.8 months.
Newly constructed houses are taking 5.9 months to sell after they are completed (a median figure). This number has been pretty consistent since the beginning of the second quarter. However in September 2006 the median marketing time was 3.4 months.