Dec New Home Sales, a measure of contract signings of new homes, totaled 342k annualized, 24k below estimates but Nov was revised up by 15k. With the extension of the tax credit in the first week of Nov, its best to take both months together to smooth out any lumpiness because of it and the result is sales are just modestly below expectations but at 356k on average, the lowest since the spring. Even though the tax credit was extended for 1st time buyers, there is no question that the summer and fall jump took sales from the Nov-Dec time frame. The main area of weakness was in the Midwest and South while rising in the Northeast and West. Months supply rose to 8.1 from 7.6, the highest since June ’09 but the absolute amount of homes for sale fell to the lowest since 1971. Prices fell 3.6% y/o/y but rose 5.2% m/o/m. As I’ve been saying, it won’t be until the summer when we’ll know what the true dynamic of supply and demand is in the industry.
