Wednesday, April 25, 2012

New home sales hit new March low in Western U.S.

New single-family home sales were at the lowest total reported during March in more than ten years  in the West region of the US, which includes Colorado. According to Tuesday's New Home Sales report, released by the Census Bureau,there were six thousand new home sales in the Western U.S. during March 2012.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were down 14 percent during March 2012 from the 7,000 new homes sold in March 2011. Nationwide, sales rose 14 percent, rising from 28,000 to 32,000 during the same period.

At 6,000 new home sales during March, sales are also down from February 2012's total of 8,000, signaling weakness in the regional homebuilding market going into the warmer spring season. 

The first graph shows monthly new home sales totals for each month since 2003:

For the West region:

The second graph shows that new home sales continue to fall and have generally followed a downward trend since the middle of the decade.

New home sales peaked during the spring and summer of 2005 and have trended downward since. The number of new houses sold in the United States is down 80 percent since the peak of March 2005, and new home sales in the West have fallen 881 percent since sales peaked in the region during March 2004.

The third graph shows the declines in both US and regional totals in new homes for sale.

The number of new homes for sale has also fallen off considerably. The number of new houses for sale in the West has fallen 76 percent since the total peaked during June 2007, and the same total has fallen 74 percent in the US since the number of new homes for sale peaked in the US during August 2006.

The number of new single-family homes for sale in the West remained near Febuary's ten-year low during March.

As a final note, we can also look to the new home inventory. In this case, we calculate inventory by subtracting the number of new home sales in a given month from the number of new homes for sale at the end of the previous month. In the final graph, we see that the inventory is now at a ten-year low of 24,000 homes. This is good news for owners seeking to sell homes since it suggests that fewer new homes are sitting and waiting to be sold, thus diminishing some of the inventory-driven downward pressure on prices.

Overall, this report shows that new home sales are not recovering quickly, and in spite of some mild rebounding in single-family permit activity (see here), new home activity is largely flat or declining and that totals are still near the same levels they were during the 2008-2009 recession. Inventory of new homes continues to decline which is good news for many people looking to see existing homes.