St Louis Real Estate – New Home Sales Fall again in December

Dennis Norman

The U.S. Department of Commerce released a report showing the sale of New Homes in December were at a seasonally adjusted annual rate of 342,000, a 7.6 percent decrease from the revised November rate of 370,000 and is 8.6 percent below 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 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 and other incentives. This can create unseasonal bursts or declines in sales that don’t really have anything to do with the underlying fundamentals of the housing market.

Effect of tax credits on homebuyers like kid’s “sugar-rush”?

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

  • 23,000 new homes sold in December, an 11.5 percent decrease from November’s 26,000 new homes sold and also a 11.5 percent decrease from December 2008 when there were 26,000 new homes sold
    • 52 percent (12,000) of the new homes sold were in the South region- a decrease of 14.2 percent from November’s 14,000 new homes sold
    • the west region had 5,000 new homes sold the same as the month before.
    • the Midwest had 3,000 new homes sold, a 40 percent decrease from November’s sales of 5,000 homes.
    • The Northeast was the only region with an increase in sales. Decmebers sales of 3,000 homes was a 50 percent increase from November’s 2,000 new homes sold.
  • 374,000 new homes sold in 2009 which is a 22.9 percent decrease from 2008 when there were 485,000 new homes sold.
    • All four regions saw fewer home sales in 2009 than 2008.
      • Midwest decrease of 22.9 percent
      • South decrease of 24.` percent
      • West decrease of 23.7 percent
      • Northeast decrease of 11.4 percent
  • Median sale price of new homes in the US in December was $221,300.
  • For the new homes sold in the US in December the median time they have been on the market for sale is 13.9 months.
  • Inventory of new home in US at end of December is 234,000 which translates into a 10.2 month supply.

So how accurate was my predicion for 2009?

For some time I have been predicting new home sales for 2009 would end up around 385,000 – 395,000…In November I pinned the number down at 390,000…I was feeling somewhat optimistic because of the tax credits. It looks like I was a little too optimistic and was off by 16,000 homes or 4.2 percent….I guess not too bad for an amateur…

My prediction for 2010

With everything going on in our economy, elections this year, etc, it is really hard to predict what will happen in the new home market. Having said that, I will say that I don’t see 2010 being worse than 2009, unless interest rates increase significantly during the year or unemployment does not improve. Abset those two events I am going to predict that 2010 will be just slightly better than 2009 and come in at 380,000 – 400,000 homes sold.

Don’t miss these posts!

We don’t spam! Read our privacy policy for more info.

🤞 Don’t miss info like this!

We don’t spam! Read more in our Privacy Policy

Leave a Reply