New-home sales hit 770,000 in September, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
September's numbers are 23.3 percent below the September 2006 level of 1.004 million homes.
New-home sales for August were adjusted down from an initially reported 795,000 to a corrected number of 735,000. New-home sales have not sunk below 800,000 since June 2000.
Builders are unlikely to see sales numbers rise until consumer demand for houses picks up. With all the negative economic and market forces arrayed against consumer confidence, sluggish sales remain the default forecast for some time to come.
"Our forecast has new-home sales bottoming at 669,000 in the first quarter of 2008, which is about 15 percent below current levels," says Global Insight U.S. economist Patrick Newport. "New-home sales will probably rebound before existing-home sales because home builders are more willing to drop prices."
New-home prices, widely reported by builders, analysts, and economists as decreasing across the country, save for a few markets, actually showed increases in the latest data from the Census Bureau and HUD. The median new-home sales price was reported at $238,000, up 2.5 percent from August's corrected figure of $232,100.
Newport calls the house price data flawed, and says non-price incentives offered to move inventory skew the data even further.
HUD and the Census Bureau also report that inventory of new-homes for sale is at an 8.3 months supply. However, this number does not include cancelled contracts. Builders have been reporting cancellation rates up to and over 40 percent, dating back to 2006. Add in the supply of never-been-lived-in new homes that are being sold on the existing market by investors, and the true inventory picture is far more than an 8.3 months supply.
"The big inventory number means that housing starts and home prices will drop quite a bit further before the housing market turns around," Newport says.