New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 3/26/08 For Feb 2008 | ||||||||||||
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Highlights
New home sales weakened again in February to a 13-year low, down 1.8 percent to an annual rate of 590,000 for a 29.8 percent year-on-year decline that offers, unlike Monday's report on existing home sales, no signal of improvement in the housing sector. But the results are still a little better than expected and do show upward revisions to the prior three month.
Unlike existing homes where prices are falling, prices for new homes are holding firm in what is a key reason behind the softness in sales. The median price for a new home jumped 8.2 percent in the month to $244,100 for a mild year-on-year dip of 2.7 percent. Supply on the market held unchanged in February at a 27-year high of 9.8 months. Regional data showed a big decline in the Northeast in complete contrast to existing homes sales data where the region was a standout performer in February.
Though less weak than expected, today's report along with weak permit data in last week's housing starts report tip the scale toward pessimism on the outlook for housing. There was no significant reaction in the financial markets to the results.
New home sales are key for helping clear the pileup in unsold inventories but a rebound is still yet to happen as sales continue their plunge, down 2.8 percent in January to a 588,000 annual rate for a year-on-year decline of 34 percent. The 588,000 rate is among the very the lowest since the 1991 recession. Prices now appear to be coming apart, dropping 4.3 percent in January alone following a 9.3 percent plunge in December. The year-on-year decline is at 15.1 percent -- this is a record for the series which goes back to the early 60s. Supply is swollen, at 9.9 months and the highest of this housing slump and the worst since the recessions in 1991 and the early 1980s.
New home sales Consensus Forecast for February 08: 575 thousand-unit annual rate
Range: 570 thousand to 610 thousand-unit annual rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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