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Economy in Brief

U.S. New Home Sales Recover Some as Prices Climb Back into Previous Range
by Carol Stone   December 23, 2010

Thin markets often behave erratically. So it is these days with home sales as well as with financial assets. Total new home sales rose to 290,000 SAAR in November from 275,000 in October, revised from 283,000. This volume change, at 5.5% month-on-month, is not large, but it follows -10.7% in October and +12.2% in September. So there's no visible trend or sign of stability.

Prices, which concerned Tom Moeller here last month with a plunge of 13.9%, were revised up slightly and then rebounded by 8.0% in November. This wide price move is impressive since these are "median" prices, the level in the middle of the distribution, and not the "average" gauge that is often impacted by movements on the extreme low or high end. So this pattern in the medians says that the entire array of home prices moved down sharply in October and back upward in November.

While the national sales total moved only moderately in November, the regional performance was quite uneven. The national sales gain came because of increases in the South, from 156,000 to 165,000, a 5.8% rise, and the West, from 51,000 to 70,000, a 37.3% jump. Sales in the Midwest declined to 33,000 from 38,000, a 13.2% decrease, and those in the Northeast by 8,000 to 22,000, representing a 26.7% fall. A quick look at the third graph here indicates that monthly moves in those regional figures don't tell us anything at all about the underlying condition of those housing markets.

Perhaps one indicator of housing market health is the months' supply of homes on the market. The total inventory at the end of November was 197,000 houses -- as it happens, the smallest amount since March 1968. At the current sales rate, this supply of unsold homes is 8.2 months' worth of sales, a period equal to the average for all the months of 2010 so far. Perhaps we can say that this inventory/sales situation has stabilized, which would be an important precursor to renewed growth in building activity.

The data in this report are available in Haver's USECON database.

US New Homes November October September Y/Y % 2009 2008 2007
Total Sales (SAAR, 000s) 290 275 308 -21.2 372 481 769
Northeast 22 30 33 -29.0 32 35 64
Midwest 33 38 48 -53.5 54 69 118
South 165 156 160 -12.7 201 264 409
West 70 51 67 -9.1 87 113 178
Median Price (NSA, $) 213,000 197,200 229,300 -2.7 214,500 230,408 243,742
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