Monday, June 25, 2012

New home sales up 14 percent in U.S. West for May 2012

New single-family home sales in the U.S. West rose 14 percent from May 2011 to May 2012, but total sales remain near post-recession lows.  According to today's New Home Sales report, released by the Census Bureau,there were 8,000 new home sales in the Western U.S. during May 2012.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were up from May 2011's 7,000 new homes sold.  Nationwide, sales rose 25 percent, rising from 28,000 to 35,000 during the same period.

Although they were up year over year, sales in May were down from April 2012's total of 9,000.

The first graph shows monthly new home sales totals for each month since 2003.  While new home sales were at a three-year high for the region, they remained down significantly from 2009's recessionary totals.

For the West region:

The second graph shows that new home sales continue to be well below peak levels, although they have begun to slowly move up in recent months. 

New home sales peaked during the spring and summer of 2005 and have generally trended downward since. The number of new houses sold in the United States is down 72 percent since the peak of March 2005, and new home sales in the West have fallen 78 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.

With 32,000 new homes for sale in May 2012, the number of new single-family homes for sale in the West remained near April 2012's ten-year low of 31,000.

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 near a ten-year low, and is at 23,000 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. Inventory has also been down in existing home sales, as noted here.

Overall, this report shows that while new home sales are not declining, they are not showing growth either. Inventory is at very low levels, although median home price growth in existing homes may not be sufficient to spur a large amount of new single-family construction.