New home sales tick up slightly in October;   still on track for worst year ever

Dennis Norman, St Louis Realtor, New Home SalesToday, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for October 2011 showing an increase of 1.3 percent from the month before, and an increase of 8.9 percent from a year ago. The seasonally-adjusted new home sales rate for October was 307,000 homes, up from an adjusted rate of 303,000 homes the month before (originally reported at 313,000 homes). Unfortunately, even with the increase in the rate of new home sales, the current rate of new home sales is still on track to make 2011 new home sales the lowest since the Commerce Department began keeping track of sales in 1963.

The supply of new homes on the market decreased to a 6.3 month supply from 6.4 months the month before. The median new home price decreased slightly for the month to $212,300 from a revised median price of $213,300 the month before and an increase of 4.0 percent from a year ago.

My Mantra

As has been my long-running mantra, I don’t like “seasonally adjusted” numbers and “rate” of sales. Why, for one I can’t figure out how in the world they compute the numbers. Second, I just don’t think discussing the “rate” of new home sales paints a realistic picture of the market.

Here is the raw data, the ACTUAL new homes sold- no fluff, no “adjusting” For October 2011:

  • 25,000 new homes sold, the same as the two prior months, and an increase of 8.7 percent from a year ago.
    • As usual, the South had the majority of the new home sales with 13,000 this month (52.0 percent of the total in US)
    • the west region had 6,000 new homes sold.
    • the Midwest had 5,000 new homes sold.
    • The Northeast had 2,000 new homes sold.
  • YTD there have been 260,000 new homes sold, a 6.8 percent decrease from this time last year.
  • New Homes in the US in sold during the month been for sale for a median time of 7.4 months since the homes were completed, down from 8.0 months the month before.

My prediction for 2011…

I’m continuing to forecast that there will be 290,000 – 319,000 new homes sold in 2011.

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