New residential sales sink 12.6% from December, 18.6% from previous January

In other words, don’t expect the construction business to rebound soon.  In a release two hours ago, the Census Bureau announced that new residential sales dropped 12.6% over a mild bump upward in December, down to a seasonally-adjusted annual rate of 284,000 units.  That number barely avoids the low-water mark reached in October 2010 of 280,000 units, which was itself the lowest such figure in the entire historical run of the data, which goes back to 1963:

Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000.

The median sales price of new houses sold in January 2011 was $230,600; the average sales price was $260,300. The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. This represents a supply of 7.9 months at the current sales rate.

The actual number of houses sold in January, not seasonally adjusted, was 19,000 — which is the lowest number in a month in the entire 48-year history of sales tracking.  That beats the monthly low hit in November by 1,000, and is 3,000 less than December.

Needless to say, Reuters was taken by surprise by these numbers:

New U.S. single-family home sales fell more than expected in January, a government report showed on Thursday, pulled down by a plunge in activity in the country’s West as a homebuyer state tax credit in California ended.

The Commerce Department said sales tumbled 12.6 percent to a seasonally adjusted 284,000 unit annual rate after a downwardly revised 325,000-unit pace in December.

Economists polled by Reuters had forecast new home sales sliding to a 310,000-unit pace last month from a previously reported 329,000 unit rate.

Yesterday, the National Association of Realtors announced a 2.7% increase in resales, but that came with a big caveat:

More people bought previously occupied homes in January. But the increase was driven by rising foreclosures and all-cash purchases by investors, while the number of first-time buyers shrank.

Prices sank to their lowest levels in nearly nine years, a troubling sign for the struggling housing sector.

Sales of previously occupied homes rose slightly to a seasonally adjusted annual rate of 5.36 million, the National Association of Realtors said Wednesday. That’s up 2.7 percent from 5.22 million in December.

Still, the pace remains far below the 6 million homes a year that economists say represents a healthy market. And the number of first-time home-buyers fell to 29 percent of the market — the lowest percentage of the market in nearly two years. A more healthy level of first-time home-buyers is about 40 percent, according to the trade group.

Housing is still on the mat in the US, thanks to chronically high unemployment and its impact on foreclosures.  Until we put people back to work, housing will drag down the economy and keep lenders on the brink of failure.  The only possible way government can stimulate the economy now is to reduce the regulatory burden it has created over the last several years, a direction opposite to this administration’s instincts and announced goals.  Don’t expect a rebound any time soon.

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