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Economy in Brief

New home sales take a breather in March but still ride a strong and unrelenting DOWN-trend.  New home sales continue to plunge despite the tiny bounce in sales in March. The number of homes for sale has surged in terms of the number of months of supply. That has worsened in part because of the slower selling pace. By comparison, existing home sales are doing a lot better with the stock of homes there contracting and the pace of sales decline muted. For new home sales - even the regional data - by and large- show that the pace is WORSENING.

We might even be persuaded to call the pace of decline catastrophic if it were not for one thing: That is that home prices are rising in the month and are up solidly Y/Y. Median prices are up by 6.4% Y/Y and average prices are up a staggering 10.4% Y/Y. What? YES!

Do prices tell us a different story or lie?
This is partly because prices in March a year ago fell sharply. If we re-cast the Y/Y calculation to take the average of February and April prices as the base for the Y/Y calculations (skipping March and effectively interpolating a different number) median prices are flat but average home prices still rise by 7.1%. This is evidence that the worst of it is in the moderately priced homes, although we know that the earning of high end builders are being hit as well. Builders appear to be using their capital to support prices or cut deals where they do not show up in the data as price declines. This sort of tool is more likely available for enticing high-end home-buyers with houses filled with lots of goodies than for low end home buyers where the new buyer wants most of all a house at the lowest price possible.The regional data show us that the pace of the sales decline is not slowing except in the Northeast (NE) where the winter months sales are always suspect. They are more suspect since the NE is the only region to show Y/Y gains is new home sales… Across the rest of the country, annual regional declines are on the order of 20% to 30%. The recent three month growth rates for new home sales in those remaining three regions range from minus 50 percent to minus 107 percent.

So while this is a weak report and it will feed weakness into GDP it is also is a report where the housing sector appears to be somewhat at least in strong hands; hands that are able to control prices and keep them from spiraling lower in the face of a very weak pace of sales. This phenomenon will be very interesting to watch in the coming months.  
New Single Family Home Sales
Momentum: Annualized Rates of Change Prices
As of: Total North East Mid West South West Median Average
Mar.07 Month-to-month percent change
Mar.07 2.6% 50.0% 9.8% -2.7% -0.9% 0.9% 1.5%
Feb.07 -4.2% -21.3% -22.8% -5.7% 21.8% 1.0% 4.7%
Jan.07 -14.4% -16.4% -13.7% -8.1% -27.5% 1.9% 3.2%
Annualized Rates
  Total North East Mid West South West Median Average
3-Mo -63.5% -5.5% -107.1% -62.7% -50.2% 16.1% 44.3%
6-Mo -32.1% 32.3% -8.6% -45.7% -30.6% 25.5% 24.8%
1-Yr -23.5% 18.0% -19.3% -25.7% -29.6% 6.4% 10.7%
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