Paper Economy: Today’s New Home Sales

Friday, January 26, 2007

Today’s New Home Sales

Today, the U.S. Census Department released its monthly “New Residential Home Sales” report for December showing record weakness to sales in 2006 as well as continued weakness to the nation’s new home market.

The full year results for 2006 were 17.3% below the full year results for 2005, that’s just .5% below the 17.8% decline registered during the recession-led housing bust of 1990.

Additionally, there is a very likely chance that revisions to the results with next months report will drive the full year 2006 decline even higher possibly surpassing the 90’s housing collapse results.

In a notable change, there was an unusually large pickup to sales in both the Northeast and Midwest regions in December serving to buoy the national results.

It appears though that, for the Northeast, the level of confidence in the reported number was very low with a (+ or –) 70.0 confidence interval.

So, we will have to wait at least another month or so for revisions to really see what’s happening in the Northeast and in turn the national numbers.

Nevertheless, the December results are still well entrenched in the existing slowdown as show by the monthly year-over-year national sales chart shown below (click for larger version).

Look at the following summary of today’s report:

National

The median price for a new home was down 1.5% as compared to December 2005.
New home sales were down 11.0% as compared to December 2005.
The inventory of new homes for sale increased 5.5% as compared to December 2005.
The number of months supply of the new homes has increased 22.9% as compared to December 2005.

Regional

In the Northeast, new home sales were up 18.3% as compared to December 2005.
In the West, new home sales were down 27.1% as compared to December 2005.
In the South, new home sales were down 8.9% as compared to December 2005.
In the Midwest, new home sales were down 2.4% as compared to December 2005.