Sales of new homes didn’t get any worse in August, but they didn’t get any better either. According to data released Friday by the U.S. Census Bureau, sales of new homes remained flat on a monthly basis in August, with no change from July’s 288,000-unit pace.
“In our opinion, today's data reflects the stagnation we have seen in field activity and squares with cautious commentary from builders about current order trends,” said Carl E. Reichardt, managing director and senior equity research analyst with Wells Fargo Securities in San Francisco. That cautiousness is coming from public builders that Reichardt covers as well as the smaller builders more typically represented in NAHB’s monthly housing market index (HMI). That data, released last Monday, revealed low, but unchanging, levels of builder confidence in the market’s health with a reading of 13 for September, the same as for the previous month.
On an annual basis, August’s new-home sales were off 28.9%.
“While this data set is volatile and subject to frequent revision, we believe current numbers reflect a post-tax credit expiration flattening in overall activity at levels approximately 20% below [the fourth quarter of 2009] and early [first quarter 2010’s] pretax credit-influenced levels,” Reichardt said. “We continue to believe home building stocks need a positive traffic or sales field catalyst to move substantially higher from current levels, and that at such low national volume levels, many builders will continue to struggle to cover fixed overhead.”
Standing inventory remains low—just 206,000 new unsold homes in August, according to the Census data. But at the slower-than-molasses sales pace of the “new normal,” selling through that inventory would take 8.6 months.
Meanwhile, prices are still eroding. The national median sales price for a new home in August was $204,700.
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: San Francisco, CA.