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Economy in Brief

U.S. New Home Sales Plumb Record Low, Weather or Not?
by Tom Moeller February 24, 2010

Whether record snowfall this season hurt housing activity is tough to say. This morning's report that new home sales fell 11.2% from December to 309,000 (AR) following that month's moderate decline suggests that it did, but January single-family housing starts were reported last week to have risen. Perhaps builders have thicker skin than buyers? It remains to be seen. Nevertheless, January sales fell well short of Consensus expectations for 355,000 and reached a record low for the series which dates back to 1963. 

The one-third m/m drop in home sales in the Northeast certainly suggests a strong weather factor after they rose sharply during December. Conversely, Mid-West sales rose 2.1% following their sharp December decline. In the West, sales drifted lower and neared their record low while sales in the South fell for the fifth month in the last six.

Home prices also were quite weak last month posting a 5.6% decline from December to $203,500. Prices fell 2.4% during the last twelve months to the lowest level since late-2003. Since the 2007 peak prices have fallen 22.5%.

Price discounts had been lowering the inventory of unsold homes, but weakness in sales and stable starts recently have lifted the inventory to   its highest level since May. The months' supply of unsold homes also has increased to 11.1 months from its July low of 7.2 months though that remained down from the high of 12.4 months in January '09. Despite the shrinkage of inventory, it still took a record median 13.9 months to sell a new home as of December.

Fed Chairman Ben S. Bernanke's Semiannual Monetary Policy Report to the Congress can be found here

US New Homes January December November Y/Y 2009 2008 2007
Total Sales (SAAR, 000s) 309 348 362 -6.1% 372 481 769
  Northeast 24 37 30 -20.0 31 35 64
  Midwest 49 48 68 -7.5 54 69 118
  South 162 179 187 -10.5 201 264 409
  West 74 84 77 13.8 87 113 178
Median Price (NSA, $) 203,500 215,600 219,100  -2.4 213,567 230,408 243,742
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