New home sales continued plummeting in January, falling an additional -2.8% MoM to a new cycle low of 588k. This is the lowest new home sales pace since 1995. In addition, this figure doesn't include cancellations. Toll Brothers this morning announced that their cancellation rate is slowing, it fell to 28% in the most recent quarter from 39% in the prior quarter. So, most likely real new home sales are even weaker than reported. Over the past year, new home sales have fallen -34% YoY.
Inventories rose again to a new high of 9.9 months, based on the current sales pace, the highest since 1981! Actual number of homes for sale fell -2.2% MoM. Clearly there is still way too much excess inventory.
Median prices tumbled further down the cliff in January, falling almost $10k MoM to $216K. This level is down -15% YoY, a new record for this series which looks back over 40 years. The mean price is down -12.1% YoY to $276.6K. But, this figure needs to be consumed with caution. The credit crunch in jumbo loans has practically shut-down activity at the upper end of the market, which naturally will bias down the median. There are also regional variations in pricing costs that will impact the national average as different regions activity changes.
Regionally, purchases fell everywhere but the West, where they rose +2.2% MoM. The Northeast saw the largest decline at -10% MoM.
New home sales account for less than 15% of home purchases each year, and they are considered a more timely indicator of demand than existing home sales. Fixed-rate interest rates rose last week to the highest level since last October, at 6.27% for a 30 year.
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