Thursday, October 26, 2006

September New Home Sales

The New Home Sales number are out for September (pdf).


Sales of new one-family houses in September 2006 were at a seasonally adjusted annual rate of 1,075,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.3 percent (±15.6%)* above the revised August rate of 1,021,000, but is 14.2 percent (±12.2%) below the September 2005 estimate of 1,253,000.

The median sales price of new houses sold in September 2006 was $217,100; the average sales price was $293,200. The seasonally adjusted estimate of new houses for sale at the end of September was 557,000. This represents a supply of 6.4 months at the current sales rat.
The national median sales price for a new home in September was 217,100 which represents a decline of 9.7% compare to September of 2005 when the price was 240,400. The average sales price for a new home September was 293,200 which represents a decline of 2.1% compare to September of 2005 when the price was 299,600. Of course, in real dollars the percentage price decline is even greater.

U.S. NEW-HOME SALES DOWN 14.2% YEAR-OVER-YEAR

These numbers are a huge challenge for the Real Estate Industrial Complex (REIC) many of whom are spouting the 'soft landing' after the largest housing boom in US history.

18 comments:

  1. These price drops are even more remarkable if one remembers that they don't include any of the special incentives (free car, closing cost help, etc) that are baked into these sales prices.

    ReplyDelete
  2. This suggests we are not even half way to the bottom. I understand new houses had a 25% profit. With a 9.7% decrease, that means they have only a 15.3% profit margin. (Of course one has to consider the incentives such as cars, TV's etc.) I assume they will keep building houses all they way down to 1% profit margins - if not further.

    ReplyDelete
  3. Nice to see prices coming back down to sane levels for new and existing homes.

    On another note, Business 2.0 magazine rates Washington, DC as one of the top 10 US markets NOT to buy real estate. The reason is that incomes of residents in DC and close-in-suburbs cannot keep pace with the real estate prices. As a matter of fact, Washington, DC is the ONLY East Coast market city that is indicated in the infamous Top 10 Bubblicious You-Are-Nuts-To-Buy-Now List.

    http://money.cnn.com/popups/2006/biz2/newrules_wherenot/9.html

    ReplyDelete
  4. I read a Washington Post article where a University of Maryland economist is saying the happy talk of the realtors is actually stringing out the crash. Homeowners who are holding out for more are going to realize at some point down the road that they are being lied to by Lereah and his minions.

    ReplyDelete
  5. ONLY East Coast market city that is indicated in the infamous

    hmm New York And the whole NNJ, I guess they are cheap????

    ReplyDelete
  6. Based on the confidence levels (e.g. NE sales 1-month percentage change of -34.9% with 90% confidence level of + or - 22.0) I don't know how you can draw any conclusions from this report.

    ReplyDelete
  7. Why is that same link to the CNN website from the earlier post also saying Los Angeles is one of the BUBBLE PROOF markets? How can they possibly stand by that claim?

    ReplyDelete
  8. “This suggests we are not even half way to the bottom. I understand new houses had a 25% profit. With a 9.7% decrease, that means they have only a 15.3% profit margin.”

    Your math is wrong. Here is a simplistic example. Suppose a house cost $80 to build, a 25% profit margin would price the house at $100. Now if the $100 house decreased 9.7% in value, its price is now $90.3, which represents a 12.9% margin, not 15.3%. You don’t just add and subtract, although I don't think your 25% is a reliable figure...

    ReplyDelete
  9. Looks like Va is "different"!??!?

    ____________________________

    Sales of homes in Virginia slid nearly 27 percent in September, marking the largest percentage drop this year -- and the 13th consecutive month of slower sales.

    The median price, with half the houses selling for more and half for less, fell 9 percent to $199,975, according to figures released yesterday by the Virginia Association of Realtors.


    crispy&cole

    ReplyDelete
  10. This suggests we are not even half way to the bottom. I understand new houses had a 25% profit. With a 9.7% decrease, that means they have only a 15.3% profit margin. (Of course one has to consider the incentives such as cars, TV's etc.) I assume they will keep building houses all they way down to 1% profit margins - if not further.

    I agree. Builders are going to ride this thing all the way back down, plowing over FB's, flippers, and the like. Look out below.

    ReplyDelete
  11. This post on CREonline.com cracks me up...

    "But the fundamental of RE may be such that we may already be near the bottom."

    http://www.creonline.com/wwwboard/messages/31582.html

    HAAAAAAAAA...Man is this guy
    in delial or just not bright????

    ReplyDelete
  12. Anon 5:33

    You're really smug to think "it's different this time". The "dip/correction" we're seeing now has happened inifinite times from time immemorial. There's nothing new out there under the sun. It's not different this time. Except for maybe that with the roaring economy we have going, this dip/correction will certainly be a lot briefer than the previous ones. Salaries and other earnings for that half of the population that are the "haves" have been going through the roof over the last 5 to 10 years. How is not reasonable to assume that house prices will have followed suit? Everything comes with a price. We get paid lots more ... and it costs lots more to live. Deal with it. Whining won't get you anywhere. And if you're not part of the half the population that is getting these unheard of increases in earnings? Do whatever you have to do to get there. Go to night school and get a masters, open a business ... whatever. It IS possible. Just realize that the days of the Great Society and the New Deal ended with Reagan and it'll be many years before we can ever get back to the egalitarian society ... even IF the conservatives lose power. Just like it's take 20+ years to feel the effects of Reagan's actions, it'll take years for any changes to happen. These things take decades to play themselves out ... and we haven't even yet begun to reverse the "Reagan" policies.

    ReplyDelete
  13. Oh please, Lance. Half? Have you bothered to look at the stats?

    Try an 80/20 split. Or better yet, a 50/30/20, with half _declining_, 30% stagnant, and 20 gaining. Of that 20% most is going to the very top.

    So no, your theory of incomes isn't suppoorted by the facts, nor do the facts support your theory of prices. Unless you think a very small % of folks with a large share of national wealth are buying up everything in housing ("Hey, just bought my 8th house! I want one in every climate zone!").

    Please leave the economics to those of us who actually have a degree in it.

    ReplyDelete
  14. Anon 5:17 said:
    "Please leave the economics to those of us who actually have a degree in it."

    Okay, I have a deal for you. I'll leave the discussion of economics to those of you with a degree in it, if you leave the discussion of houses to those of us who actually own one.

    ReplyDelete
  15. Lance said...
    “You're really smug to think "it's different this time". The "dip/correction" we're seeing now has happened inifinite times from time immemorial. There's nothing new out there under the sun. It's not different this time.”

    OK, something Lance and I almost agree on; it’s not different this time. So Lance a reversion to the mean is in order? I personally don’t think we’ll see that big of a drop. And after all this time, you’re predicting a bigger drop than me (as seen by “inifinite times from time immemorial”)

    http://www.bubblepic.com/displayimage.php?album=9&pos=4

    “Salaries and other earnings for that half of the population that are the "haves" have been going through the roof over the last 5 to 10 years. How is not reasonable to assume that house prices will have followed suit?”

    Salaries may have increased greatly, but home prices have greatly surpassed salary increases.

    “Just like it's take 20+ years to feel the effects of Reagan's actions, it'll take years for any changes to happen. These things take decades to play themselves out ... and we haven't even yet begun to reverse the "Reagan" policies.”

    And we have yet to feel the full effects of the last 17 straight rate hikes.

    ReplyDelete
  16. Lance

    That has top be the most insipid "apples to oranges" comparison I've seen in a while. Having an academic background and experience in a knowledge = owning something discussed? I suppose Lactose intolerant economists should stay out of discussions of the milk commodities market, but people with a gallon of low-fat in the fridge should be given all deference?

    Next up, Lance will graciously respect that only engineers should design bridges, if only homeowners can discuss the housing market.

    BTW - None of this changes the basic point that your aserted "facts" were completely wrong.

    ReplyDelete
  17. Hilarious thread. :)

    What made Lance's "homeowner" comment so funny is that you can just feel the superiority coming through the keyboard. He honestly thinks that homeowners are automatically smarter, wealthier, better citizens, etc...in essence better people than those who don't own. The line is: Achieve homeownership and you have "made it."

    And Lance is not alone - this is the mantra repeated in working class neighborhoods across America. Traditional homeownership (i.e. 20% down, 30 year fixed) is a worthy goal. But the exotic financing created a slew of problems. Now the fallout is going to be hardest on those least able to recover from it (working and lower middle class families).

    ReplyDelete
  18. Mr. Economist can brag all he wants about his superior knowledge of economics allowing him to make better buying decisions, but the bottom line is that inspite of all that knowledge he is still a renter. I have nothing against knowledge gained from books (I have an advanced degree myself which included economics courses), but there is nothing like practical "where the rubber hits the road" experience. And from Mr. Economist's musings, it's very clear that he doesn't have that. He is living in a fantasy world constructed of correct facts which he doesn't have the practical experience with to align in a fashion that makes sense. Priests can and do give marriage conseling to couples. Whether they really can, is whole different discussion.

    ReplyDelete