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Economy in Brief

U.S. New Home Sales Slip But Prices Plummet
by Tom Moeller  September 26, 2011

The sales market for new homes remained weak last month, and that greatly depressed home pricing power. Total new home sales decreased 2.3% to 295,000 after a downwardly revised 0.3% July slip. The latest was the fourth consecutive monthly decline and it matched the Consensus expectation. But that's not all that was down last month. The median price of a new single family home dropped 8.7% m/m to $209,100 (-7.7% y/y). The average dropped by the same amount m/m to $246,000 (-8.5% y/y). Measured either way, prices were near their lowest since the middle of 2003.

As has been the case recently, sales performance varied by region of the country. The Northeast saw a 13.6% m/m decline and sales fell by slightly more than one-third y/y. Sales in the West saw a more modest 6.3% m/m drop followed by the South which had a 2.4% m/m decline. Sales in the Midwest rose 8.2% and by two-thirds y/y. Home sales remained down by three-quarters from the record 1,279,000 during all of 2005.

The inventory of unsold homes fell to a new low for the series (-21.4% y/y) and it remained near the cycle-low at 6.6 months of sales. This story of a low inventory of unsold homes doesn't vary across the country.

The data in this report are available in Haver's USECON database. The expectation figure from Action Economics is available in the AS1REPNA database

U.S. New Home Sales Aug Jul Jun Y/Y % 2010 2009 2008
Total (SAAR, 000s) 295 302 303 6.1 321 374 482
Northeast 19 22 14 -36.7 31 31 35
Midwest 53 49 43 65.6 45 54 69
South 164 168 174 9.3 173 202 265
West 59 63 72 -10.6 74 87 113
Median Price (NSA, $) 209,100 228,900 238,400 -7.7 221,242 214,500 230,408
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