The steep drop in new starts in single-family residential homes announced last week signaled that sales of newly-constructed houses had fallen sharply in February. Sure enough, the Census Bureau confirms that sales of new homes has hit another record low in the 48 years that the US government has tracked this economic indicator, sliding to an annual sales rate of 250,000:
Sales of new single-family houses in February 2011 were at a seasonally adjusted annual rate of 250,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 16.9 percent (±19.1%)* below the revised January rate of 301,000 and is 28.0 percent (±14.8%) below the February 2010 estimate of 347,000.
The median sales price of new houses sold in February 2011 was $202,100; the average sales price was $246,000. The seasonally adjusted estimate of new houses for sale at the end of February was 186,000. This represents a supply of 8.9 months at the current sales rate.
January sales got revised upward from 19,000 to 21,000, but the actual sales in February sank to 19,000. Every area of the country lost ground, with the northeast getting particularly hammered by a 57% drop in sales from January and the Midwest sinking 27.5%. Year on year, the two declined 50% and 40.8%, respectively, with a 34% drop in the West as well.
Despite the very obvious red flag from last week’s announcement, today’s announcement managed to catch Reuters by surprise … again:
New single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, showing the housing market slide was deepening.
The Commerce Department said on Wednesday sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January.
Sales plunged to all-time lows in three of the four regions last month. Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.
What were they expecting? The big drop in starts announced last week had to mean that new-home sales had stalled, and that capital for new starts had been choked off as a result. Last week’s announcement even referenced the climbing inventory in new single-family homes. If inventory grew and new starts fell, should the math on this equation really be that difficult?
The Associated Press must have figured it out a little earlier:
Sales of new homes plunged in February to the slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market.
New-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes, the Commerce Department said Wednesday. It’s the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy.
Of course, they were actually lo0king for clues, too:
Builders have struggled to compete with a wave of foreclosures that has lowered the price of previously occupied homes. High unemployment, tight credit and uncertainty over prices have also kept many potential buyers from making purchases.
Don’t worry, though … I’m sure Recovery Summer is right around the corner.