Ouch!!

Not to get too carried away with a boxing analogy but if the “new home” market were a prize fighter, it would be, at best, bloodied, bruised and confused, staggering aimlessly around the ring seemingly looking for the most comfortable piece of canvas to use for nighty-night.

By now it’s been well reported that the July New Home Sales results were poor but digging a little deeper into the report one finds some truly harsh figures.

First, take a look at the regional “New Houses Sold” numbers:

1. Northeast, down 42.9% as compared to July of 2005.
2. Midwest, down 35.4% as compared to July of 2005. In fact, the Midwest is down 21.3% just since this June!
3. South, down 12.4% as compared to July of 2005.
4. West, down 23.4% as compared to July of 2005.

Next, look at the national numbers for “New Houses (still) For Sale”:

1. 22.4% increase in new homes for sale as compared to July of 2005.
2. 54.8% increase in the number of “Months supply” which now stands at 6.5 months. So it would take 6.5 months to sell off the entire “New Home” inventory that is on the market as of today.

Now, look at the national numbers for “New Houses Sold” by price range:

1. For homes under $150,000, down 33% as compared to July of 2005.
2. For homes between $300,000 and $399,000, down 20% as compared to July of 2005.
3. For homes between $400,000 and $499,000, down 44% as compared to July of 2005.

So, I suppose this is what all the home builders were talking about. A very abrupt and striking collapse of the “new home” market seems well underway.

Considering that Toll, Pulte, Centex, KB Home and others are holding an unsold, and growing inventory of 568,000 new homes, I wonder how long it will be before they give up on offering buyer incentives and start getting down to the business of slashing prices.