New home sales rate up over six percent in September; down over 20 percent from year before

Dennis Norman

Today, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for September 2010 showing an increase of 6.6 percent from the month before, but a decrease of 21.5 percent from a year ago.

The seasonally-adjusted new home sales rate for September was 307,000 homes, a 6.6 percent increase from August’s rate of 288,000 homes. The supply of new homes on the market dropped from a 8.6 month supply in August to a 8.0 month supply in September which is good news. Also on a positive note, the median new home price increased slightly for the month to $223,800 from $220,500 the month before and about 3.3 percent higher than a year ago when the median new home sales prices was $216,600.

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. 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”

• 24,000 new homes sold in September, a decrease of 4.0 percent from August’s revised 25,000 new homes sold and a 20.0 percent decrease from September 2009 when there were 30,000 new homes sold.
  • 50.0 percent (12,000) of the new homes sold were in the South region-
  • the west region had 5,000 new homes sold.
  • the Midwest had 4,000 new homes sold.
  • The Northeast had 3,000 new homes sold.
• YTD – In the first nine months of 2010 there have been 257,000 new homes sold, a decrease of 11.7 percent from the same time last year.
• Median sale price of new homes in the US in September was $223,800, an increase of 1.5 percent from August’s median new home price of $220,500 and a 3.3 percent increase from a year ago when the median new home price was $216,600.
• New Homes in the US in August have been for sale for a median time of 8.7 months since the homes were completed, a 14.7 percent decrease from August’s revised figure of 10.2 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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