Filed under: Bad news, Economic data, Housing, Recession
U.S. new home sales fell to a seasonally-adjusted, annualized pace of 526,000 in March 2008 - - a 17-year low, the U.S. Commerce Department announced Thursday. (pdf)
Economists surveyed by Bloomberg News had expected March 2008 new home sales to register a 580,000 annualized rate.
Sales have now declined for five consecutive months, and are down 36.6% in the last 12 months.
Meanwhile, inventories surged to an 11-month supply at the March 2008 sales rate, up from a 9.8-month supply in February. Inventories are at their highest level since 1981. A healthy housing market typically has a 3-4 month supply.
Also, February 2008 sales were revised down slightly, to 575,000 from the earlier released 590,000.
In addition, the median sales price of new houses sold in March 2008 was $227,600; the average sales price was $292,200. The median sales price has now decreased 13.3% in the past 12 months.
Sales fell in each U.S. region: declining 19.4% in the Northeast, 12.9% in the West, 12.5% in the Midwest, and 4.6% in the South.
‘Scary’ housing stats
Economist Peter Dawson called the March 2008 housing statistics, “scary.”
“These are scary numbers. With an 11-month supply of houses, you’re looking at a housing market that won’t start to recover until well into 2009, at ideal, which will be a major drag on the economy,” Dawson said. “It also obviously places more pressure on the Fed to cut interest rates.”
Dawson stated equally troubling is the U.S. median sales prices decline. “A 10% decline nationally over the past year says there’s a remarkable amount of weakness in the housing sector,” Dawson stated. “The last time it dropped more than 10% in one year nationally, I believe it was the Depression era [1930s]. Clearly, we’re going to need all hands on deck to turn this housing sector around. This is the worst housing slump I’ve ever experienced.”
Many economists and analysts anticipate new home sales to continue to decline through 2008, as home builders reduce construction, due to anemic U.S. economic growth, sluggish new household formation, and more-rigorous mortgage approval stipulations.
Some analysts also argue that the U.S. new home sector may incur a corrective period as long as two to three years - - lasting through perhaps the end of 2009 - - to compensate for speculative overbuilding in selected regions of the country during the housing boom.
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