New Home Sales better than expected

New Home Sales totaled 430k annualized, 26k above expectations and up from a revised 405k in Sept. Months supply continued its decline, falling to 6.7 from 7.4 and is at the lowest level since Dec ’06 and is down from the peak of 12.4 in Jan. Over the past 30 yrs, the average supply is 6.1 mo’s so we have clearly made much progress in terms of new home building and inventories as the absolute # of new homes for sale fell to 239k, the lowest since ’71. Competition from foreclosures has certainly crimped new home sales. The gain in sales for the month was solely in the South which more than offset drops in the Northeast, Midwest and West. The median home price at $212,200 is down .5% y/o/y as 79% of all sales were homes priced below $300k. Sales of homes above $500k totaled only 6% down from 11% in Sept. For those who signed a contract in Oct knew they had to close by Nov 31st in order to get the tax credit which now runs till April and we don’t know what rush there was at the time in order to qualify.

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