Wednesday, July 27, 2011


New Home Sales in May fell by 1.0% from May, to a rate of 312,000. Relative to a year ago, sales are up 1.6%. While the rebound is more than welcome, it is still a very dismal rate of New Home sales. Also, there was a downward revision to the May numbers of 4,000 to 315,000. Thus, relative to where we thought we were, it could be seen as a 2.2% decrease.

The June level was worse than the expected rate of 320,000. The fourteen lowest months on record (back to 1963) for New Home Sales have all been in the last fourteen months. New Home sales have only exceeded the 400,000 level three times since September of 2008, when the financial markets collapsed. The most recent time was in April 2010 as sales were inflated by the rush to get in under the wire and collect the homebuyer tax credit.

Sales collapsed after that, and June comp is thus an easy one. Relative to the peak of the housing bubble (7/05, 1.389 million) new home sales are down 77.5%. Prior to September 2008, there had only been 20 months in which new home sales were below the 400,000 level, with the most recent being in 1982.

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