Monday, November 28, 2011

October new home sales up 50 percent in West

In October of this year, new single-family home sales rose slightly in the US, and rose in the West region, which includes Colorado. However, according to new data released by the Census Bureau today, new home sales in October were at the second-lowest October total recorded in at least ten years.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were up year over year, increasing 50 percent to 6,000 in October 2011 from 4,000 new homes sold in October 2010. October of last year showed the lowest monthly total for new home sales during the past ten years. Nationwide, sales rose 8.6 percent, increasing from 23,000 to 25,000 during the same period.

In the West, no month has shown fewer than 4,000 new home sales for the region during the past decade, and October 2011's total of 6,000 new home sales, while at a three-month high, remains the second-lowest total for October reported over the past decade.

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 84 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 75 percent since the total peaked during June 2007, and the same total has fallen 71 percent in the US since the number of new homes for sale peaked in the US during August 2006.

At 33,000, the number of new single-family homes for sale in the West is tied at the lowest level it's been in more than ten years. This reflects very low demand in the face of an ongoing and large number of new foreclosures and low-priced properties in many areas of the West, including Colorado. Although foreclosures have fallen in Colorado in recent years, foreclosure rates remain near historic highs. The national total of new homes for sale is at a ten-year low of 162,000.

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 now at a ten-year low for October with 28,000 homes. This is good news for owners of existing homes 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.