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Economy in Brief

US Home Sales Stable at Lower Level, Revisions Down
by Tom Moeller October 25, 2007

New single family home sales rose 4.8% last month and recovered much of the prior month's 7.9% m/m decline. Nevertheless, sales during the latest three months averaged 41.6% below the peak hit in the middle of 2005.

New home sales in July & August were revised down by roughly 8.0%.

In the West, sales recovered 37.7% last month after a 22.9% plunge during August. But the three month average is down an recessive 47.9% from the peak in mid-2005. Sales in the Northeast, which fell in September by 6.6%, are down 40.7% on average from the middle of 2005. Sales in the Midwest also fell in September by 19.5% and they actually led the pack with a 51.8% decline versus the 2005 peak. Sales in the South rose a small 0.5% in September and were off 43.9% from the 2005 peak.

According to CNN, David Seiders, chief economist for the home builders' trade group, indicated Thursday that the latest report has some questionable readings, including a 38 percent rise in sales in the West, which he expects will be revised significantly lower in subsequent months. Without that reported increase, sales would have fallen from the already weak revised level in August.

All this weakness in sales has done nothing for prices. They rose 2.5% in September but that only made half of the prior month's decline. It left prices down 9.4% from the peak earlier this year.

The number of homes for sale has surprisingly been falling of late, down 8.6% from the peak last year. But the number still is nearly double the level in early 2001. At the current sales rate, the months' supply of homes on the market rose to 8.3, also about double the low rate in 2005.

US New Homes September August Y/Y 2006 2005 2004
Total Sales (SAAR, 000s) 770 735 -23.3% 1,049 1,279 1,201
Median Price (NSA, $) 238,000 232,100 5.0% 243,067 234,208 217,817
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