Mar 26, 2009
Ouch — Feb new home sales hit hard
26 Mar 2009
Posted by Andrew Kantor
I prefer to report good news, but I’m not going to shy away from the bad stuff. I see no point in it. So here goes.
February sales of new homes were down between 33.2% and 49% from last year, according to a joint report from the Census Bureau and HUD. (Link goes to PDF of press release.)
Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (±18.3%)* above the revised January rate of 322,000, but is 41.1 percent (±7.9%) below the February 2008 estimate of 572,000.
OK, we can ignore the "4.7 percent" figure because it’s plus or minus 18.3 percent — ergo, it means nothing, or as the Census Bureau puts it, "it is uncertain whether there was an increase or decrease."*
The painful figure is that -41.1% number, because that’s the figure that matters. We have to compare to last year because of the seasonal nature of home sales. (The actual number, to save you the trouble of doing the math, is [down 41.1%, plus or minus 7.9%] — i.e., down between 33% and 49%.)
So at best, only 2/3 the number of new homes sold in February compared to last year; at worst we’re talking about half as much.
Of course, you can adjust the figures for season, but that gets you an ugly pic (this from the Census Bureau):
One reason for the sharp dip in new-home sales is likely the larger number of foreclosures and short sales ("distressed sales," to use NAR’s parlance) — it’s hard for a home builder to compete with those deep discounts.
In fact, since I’m in a charting mood, here’s one from the Calculated Risk site that illustrates that:
So I say again: Ouch.
*To put it another way, the Census Bureau said that new home sales were either down 13.6% from January, up 23%, or anywhere in between. It means zilch.