Home Sales Sink Further

[MichaelC 160]

Extra! Extra! Read All About It!!

 

New-home sales sink 8.5% to 17-year low

Despite huge price declines, inventory on market rises to 27-year high

By Rex Nutting, MarketWatch

Last update: 12:07 p.m. EDT April 24, 2008

 

WASHINGTON (MarketWatch) -- U.S. home builders have slashed their prices by a record amount, but sales still plunged by 8.5% to a 17-year low in March, the Commerce Department estimated Thursday.

The decline in new-home sales to a seasonally adjusted annual rate of 526,000 was much weaker than the 577,000 pace expected by economists surveyed by MarketWatch.

New-home sales are down 36.6% compared with a year ago and are down 62% from the peak in July 2005. February's sales pace was revised lower to 575,000 from 590,000.

"There is little to support any claims that the housing market is stabilizing, let alone forming a bottom," wrote Richard Moody, chief economist for Mission Residential.

"The growing imbalance between housing demand and supply suggests continued construction cuts and price declines, and in turn, an extended period of sluggish economic growth," wrote Michelle Meyer, an economist for Lehman Bros.

The figures likely overstate the number of sales because they don't account for canceled sales, which have ballooned. The report is based on contracts signed, not sales closed.

Perhaps the only ray of hope was data showing that inventories of unsold homes fell for the 12th consecutive month in March, an indication that builders are making some progress to get their inventories under control. However, with sales plunging even faster, the supply of homes on the market rose to 11 months, the most in 27 years.

Inventories are likely understated as well because of canceled sales contracts.

The number of completed homes for sale fell for the third straight month to 189,000 after peaking in January at 198,000. Completed homes represent more than 40% of the total inventory, just off the record percentage set in February and an indication of how much speculation had taken over in the home building industry.

Most analysts believe it could take several more years to bring inventories back in line with fundamentals. Builders are competing against an influx of supply from foreclosed homes and homes being sold by distressed owners.

Median sales prices for new homes have fallen 13.3% in the past year to $227,600, the biggest decline in 38 years.

Average sales prices are down 11.3% to $292,200, the biggest drop since the record book begins in 1963.

"The fact that prices are falling so rapidly is scaring off potential buyers despite the improvement in affordability," wrote Sal Guatieri, an economist for BMO Capital Markets.

Sales fell in all four regions, dropping 19.4% in the Northeast to a 27-year low, falling 12.9% in the West to a 17-year low, falling 12.5% in the Midwest to a 27-year low, and slipping 4.6% in the South to a 12-year low.

Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn't sure whether sales rose or fell. The standard error in March, for instance, was plus or minus 16.1%. Read the full government report.

The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 590,000 annual pace, 35% slower than a year earlier.

In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006.

 

In separate reports, the Commerce Department said orders for U.S.-built durable goods fell for the third straight month in March, the first time that's happened since the 2001 recession.

Meanwhile, the Labor Department reported first-time claims for unemployment benefits fell by 33,000 to a two-month low of 342,000.

 

Rex Nutting is Washington bureau chief of MarketWatch.

[MichaelC 160]

Wow! In a week filled with gloomy economic reports, this one might be the gloomiest yet.

Gold bullion, ammo, and a cave in Kentucky are startin' to sound pretty good about now.

[Dustin 0]

So no new homes being sold and the work force is getting back on its feet? hehehe.

 

So, the opportunity is with existing homes and lots of T/Bs will be coming our way!!!!

 

WOOOHOOOO!!!