No Improvement in New Home Sales in August

Dennis Norman

Last month I reported that July’s new home sales rate of 276,000 homes was the lowest rate on record.  Subsequently the Commerce Department revised July and changed the sales rate to 288,000 homes raising July to the second-lowest home sales rate on record.  Today, the numbers for August came out and they are no better….the new home sales rate for August is being reported by the Commerce Department as 288,000 homes, the same as July.

The August new home sales rate of 288,000 homes is 28.9 percent below a year ago.  The only good thing I see in the report is that the inventory of new homes for sale dropped slightly in August to 206,000 homes from 209,000 in July, which translates in to a 8.6 month supply which is a slight improvement over the prior month of 8.7 months.

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 New Home Sales September 2009the “rate” of new home sales paints a realistic picture of the market. I think this holds especially true when we have artificial forces affecting the housing market such as tax credits as we have seen what an artificial “bubble” in the market this can cause.

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

  • 25,000 new homes sold in August, a decrease of 7.4 percent from July’s revised 27,000 new homes sold and a 30.6 percent decrease from August 2009 when there were 36,000 new homes sold.
    • 48.0 percent (12,000) of the new homes sold were in the South region-
    • the west region had 6,000 new homes sold.
    • the Midwest had 3,000 new homes sold.
    • The Northeast had 3,000 new homes sold.
  • YTD – In the first eight months of 2010 there have been 234,000 new homes sold, a decrease of 10.4 percent from the same time last year.
  • Median sale price of new homes in the US in August was $204,700, a slight decrease from July’s median new home price of $205,900 and 1.1 percent decrease from a year ago when the median new home price was $207,100.
  • New Homes in the US in August have been for sale for a median time of 10.3 months since the homes were completed, a 8.8 percent decrease from July’s revised figure of 11.3 months.

My prediction for 2010

Another crappy year for new home sales….I’m going to stick with my prediction of 300,000 – 336,600 new homes sold in 2010.

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