Paper Economy: New Home Sales: March 2007

Wednesday, April 25, 2007

New Home Sales: March 2007

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for March showing both significant downward revisions to the results for every month since November 2006 as well as continued weakness for the March results.

Hopes for a bottom to the new home market are now surely dashed as March showed that sales were down across virtually every region, most notably the West, as well as a 27.9% increase to the months supply as compared to March of 2006.

Easily the most notable aspect of the report was the enormous downward revisions to November and December of 2006 and January and February 2007 helping to push their respective year-over-year declines further into the double-digits.

It’s important to keep in mind that these declines are coming on the back of the significant declines seen in 2006.

This should not be understated as it is clearly showing continued and even accelerating weakness to new home sales.

The following charts show the extent of sales declines seen since 2006 as well as illustrating the further declines 2007 is showing on top of the 2006 results (click for larger versions)

Note that the last chart essentially combines the year-over-year changes seen in 2005 and 2006 and shows sales trending down precipitously as compared to the peak period.

Look at the following summary of today’s report:

National

The median price for a new home was up 6.36% as compared to March 2006.
New home sales were down 23.5% as compared to March 2006.
The inventory of new homes for sale declined 1.4% as compared to March 2006.
The number of months’ supply of the new homes has increased 27.9% as compared to March 2006.

Regional

In the Northeast, new home sales were up 18.0% as compared to March 2006.
In the West, new home sales were down 29.6% as compared to March 2006.
In the South, new home sales were down 25.7% as compared to March 2006.
In the Midwest, new home sales were down 19.3% as compared to March 2006.