The string of bad economic news to close out Q1 continued today with the Census/HUD announcement of new residential sales in March. The seasonally-adjusted annual rate of sales fell 7.1% from February, although there are a few glimmers of good news in the decline:
Sales of new single-family houses in March 2012 were at a seasonally adjusted annual rate of 328,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.1 percent (±20.7%)* below the revised February rate of 353,000, but is 7.5 percent (±19.6%)* above the March 2011 estimate of 305,000.
The median sales price of new houses sold in March 2012 was $234,500; the average sales price was $291,200. The seasonally adjusted estimate of new houses for sale at the end of March was 144,000. This represents a supply of 5.3 months at the current sales rate.
The inventory number gives a little more reason for optimism. After more than three years of declines in new-home construction, the light at the end of the tunnel is at least in sight. An inventory of five to six months is reasonable and manageable, and will encourage more production — assuming demand rises. Unfortunately, as more foreclosures get dumped into the market this year, demand for new homes will probably remain near the bottom as buyers look for deals.
Reuters takes the glass-half-full approach, in part because previous estimates for December, January, and February got revised upwards:
New U.S. single-family home sales dropped in March to their lowest level in four months, but the reading still beat analysts’ expectations as the government said sales in prior months were higher than initially thought.
The Commerce Department said on Tuesday sales slipped 7.1 percent to a seasonally adjusted 328,000-unit annual rate.
Home sales in February were revised higher to 353,000 units, the fastest pace since November 2009, up from the previously reported 313,000 units.
Unfortunately, this comes in tandem with a poor report on resales in March, which fell 2.6% from February as well. At least one-fifth of those sales were to investors, not families looking to own, which means that actual demand for ownership looks very soft indeed. Recent jobs reports give no indication that demand will strengthen, either. While the markets appear to be approaching a bottom — prices rose in resales in March, for instance — there is little indication that any rebound is in sight.
Update: Meanwhile, don’t expect anything better from the rest of the economy this year, USA Today warns:
Rather than a breakout surge in economic growth, mainstream forecasters say, Americans should expect the U.S. economy to slog forward for another couple of years.
The economy grew at a subpar annual rate of 1.7 percent last year, down from 3 percent the year before. The consensus forecast for this year now is for growth of 2 to 2.5 percent.
The U.S. economy is expected to slow later this year, dragged down by slowing global growth, rising anxiety about the elections and the specter of gridlock in Washington over urgent tax, spending and debt deadlines. The Bush-era tax cuts of 2001 and 2003 and the payroll tax cut of the past two years expire at year’s end, when last year’s debt deal also will force across-the-board cuts in federal spending unless Congress and the president strike new deals, but there’s no consensus on that.
A spate of recent indicators punctuated fears that the economy is stalling. March delivered only 120,000 new jobs, and the latest manufacturing and real estate data softened. Some economists say the economy’s strong six-month run through March might not be sustainable.
It actually wasn’t all that strong, either. The annualized GDP growth rate for 2011Q4 only came to 3.0%, which isn’t weak but isn’t exactly strong. From what we’re seeing in March, 2012Q1 is likely to finish well under that mark — but we’ll get our first look at that on Friday.