Friday, February 24, 2012

New homes for sale in U.S. West at historic lows

In January of this year, new single-family home sales rose in the US, and were flat in the West region, which includes Colorado. According to new data released by the Census Bureau today, new home sales in January have been flat in the West region for the past three years.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were flat year over year with 5,000 sales in January 2012, which was the lowest January total recorded in more than ten years. There were 5,000 sales during January 2011. Nationwide, sales rose 4.7 percent, rising from 21,000 to 23,000 during the same period.

In the West, no January has shown fewer than 5,000 new home sales for the region for any year during 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 82 percent since the peak of March 2005, and new home sales in the West have fallen 86 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 73 percent in the US since the number of new homes for sale peaked in the US during August 2006.

At 32,000, the number of new single-family homes for sale in the West is at the lowest level it's been in more than ten years. No month has shown fewer than 32,000 new homes for sale during the past decade. 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 during January set a new ten-year low of 151,000.

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 has essentially been flat since March 2011, hovering near 30,000 homes. There was an inventory of 29,000 homes during January 2012. 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.