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Economy in Brief

U.S. New Home Sales Stay Low As Prices Firm
by Tom Moeller June 24, 2009

Sales of new single-family homes during May continued the sideways movement of 2009. Sales were stable with April at 342,000 units (AR) and have shown little month-to-month change this year. That stability, however, follows a one-third sales decline over the last year and a three-quarters decline since the 2005 peak. May sales fell short of Consensus expectations for sales of 360,000 units. The new home sales figures are available in Haver's USECON database.

Around the country sales patterns continued to vary. Sales in the Northeast and in the Midwest rose last month but sales barely inched higher out West. Sales in the South reversed their April gain and fell back to near the record low.

The modest firming of home sales continued to strengthen prices. The median price for a new single-family home rose 4.2% last month to $221,600 after a like gain during April. Nevertheless, prices have fallen 3.5% over the last twelve months as well as since yearend 2008. Since their peak early in 2007, new home prices have fallen by roughly one-quarter.

Price weakness has helped move the inventory of unsold homes which has fallen by nearly one-half since the peak during 2006. In each of the country's regions, inventories are down by roughly one-third just during the last year. The month's supply of new homes for sale also has started to drop. In May the months supply in inventory fell to its lowest level since last July. But there's more inventory to move with lower prices if sales remain low.

A related development indicated that mortgage applications for purchase of a home rose last week to the highest level since early April (-15.9% y/y). These figures from the Mortgage Bankers Association are available in Haver's SURVEYW database.

US New Homes May April Y/Y 2008 2007 2006
Total Sales (SAAR, 000s) 342 344 -32.8% 479 768 1,049
  Northeast 27 21  -12.9 35 64 64
  Midwest 51 43 -32.0 69 118 161
  South 184 201 -35.9 264 408 559
  West 80 79 -31.0 111 178 266
Median Price (NSA, $) 221,600 212,600 -3.4 230,408 243,742 243,067
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