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 9/25/08 For Aug 2008 | ||||||||||||
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Highlights
The worst for the housing sector appears to be still ahead. New home sales plunged 11.5 percent in August to a 460,000 annual unit rate, a rate comparable to downturns in the early 90s and early 80s (times of a smaller housing base). Sales were especially weak in the West and Northeast. The year-on-year decline stands at 34.5 percent.
Supply on the market did fall back in total units to 408,000 from July's 427,000, but the slower sales rate means homes are sitting on the market longer. Supply at the current sales rate rose from 10.3 months in July to 10.9 months -- one of the very highest readings in nearly 50 years of data.
Prices fell a very steep 5.5 percent on the month to a median $221,900. The year-on-year decline of 6.2 percent has been steeper during the ongoing downturn but is still one of the very steepest on record.
Yesterday's existing home sales report showed less steep sales declines but similar price declines. Falling prices reflect distressed sales and point ahead to yet greater distress in the credit and housing sectors. There was no reaction to the report as the financial markets await bailout developments in Washington where results of August's housing data are a certain topic.
New home sales have been showing no sign of improvement while supply on the market is coming down. New home sales came in at a 515,000 annual unit rate in July and, importantly, sales for June and May were both revised lower by a combined 46,000 units. Year-on-year sales were down 35 percent. But homebuilders have been cutting back on construction as new homes on the market fell 23,000 in the month to 416,000, pulling down the months' supply to 10.1 from 10.7 in June and 10.8 in May. The median sales price rose 0.3 percent in the month but was down 6.3 percent on the year.
New home sales Consensus Forecast for August 08: 510 thousand-unit annual rate
Range: 490 thousand to 530 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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