2011 New Home Sales: Worst Ever?

Originally published by: Building Online

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New home sales fell for the 4th straight month to a seasonally adjusted annual rate of 298,000 in July 2011. Assuming this trend continues, new home sales are on track to finish this year as the worst on records dating back 50 years.

Sales of new single-family houses in July 2011 were at a seasonally adjusted annual rate of 298,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.7 percent (±12.9%)* below the revised June rate of 300,000, but is 6.8 percent (±13.5%)* above the July 2010 estimate of 279,000.

The median sales price of new houses sold in July 2011 was $222,000; the average sales price was $272,300. The seasonally adjusted estimate of new houses for sale at the end of July was 165,000. This represents a supply of 6.6 months at the current sales rate.

"The fact that new-home sales fell by less than one percent in July is an indication of how little conditions have changed in the housing market," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While new-home inventories are exceptionally thin, home builders are still competing with large numbers of foreclosed and distressed homes on the market and a climate of uncertainty in which consumers are reluctant to go forward with a major purchase for fear of what economic news tomorrow might bring."

"The sales pace of newly built, single-family homes in July was in line with what it has been over the last year, and this is in keeping with our forecast," said NAHB Chief Economist David Crowe. "While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost home buyers' confidence."

Regionally, new-home sales recorded declines of 7.4 percent in the South and 5.9 percent in the West, but rose 2.4 percent in the Midwest and actually doubled (100 percent increase) in the Northeast from a record low number in the previous month.

The inventory of new homes for sale in July fell to a 48-year record low of just 165,000 units, which represents a 6.6-month supply at the current sales pace. Putting this situation into perspective, said Crowe, "The current nationwide inventory of completed new homes ready for occupancy - at 61,000 units - is in keeping with what a single major metropolitan area such as Atlanta might sell in a typical year."

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.