New-home sales cratered in May, dropping 33% over the previous month to hit a rate not seen since 1963. The market had almost nowhere to go but up, and it did rise in June, jumping from an annual rate of 267,000 the previous month to 330,000 in June. That’s still the second-worst number in a year:
The Commerce Department says new home sales rose nearly 24 percent in June from a month earlier to a seasonally adjusted annual sales pace of 330,000. May’s number was revised downward to 267,000, the slowest pace on records dating back to 1963. Sales for April and March were also revised downward.
Commerce’s own release doesn’t make things sound very optimistic, either:
Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
The median sales price of new houses sold in June 2010 was $213,400; the average sales price was $242,900. The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
That inventory number is a little bit of good news. It had been as high as nine months at contemporaneous sales rates, which indicates that we may finally be working our way through the bubble.
The sales price data wasn’t nearly as good, however. A year ago, while we were in recession, those figures were $216,700 median and $270,900 average. Two years ago, it was $232,100 and $292,600, respectively. The closing gap between the two figures in June 2010 may indicate less artificial inflation in prices, but it also shows that home values continue to drop even in the new-home market.
And for that matter, so are sales, as the chart below shows, with data taken from the Commerce release (numbers shown in thousands):
The green star shows the expiration of the home buyer tax credit at the end of April. Note that the rate of sales in new homes had been declining since the end of last summer. The tax credit provided a short-term burst of demand in March and April of this year, which didn’t do anything but steal sales from May and June. We can draw a trend line between February and June that would show a direct connection to this latest sales figure. The gimmick has done nothing to solve the underlying problems in the housing markets, but did manage to introduce more uncertainty and instability.
Where else have we seen a chart of sales that looks like this? Oh, yeah.