Sales of new single-family homes continued to slump in February, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. New-home sales were at a seasonally adjusted annual rate of 590,000, down 1.8 percent from January’s revised rate of 601,000 and 29.8 percent from the 840,000 homes sold in February of 2007. It was the slowest sales pace in 13 years.
The median sales price of new houses sold in February was $244,100, down from $250,800 a year earlier; the average sales price plummeted from $321,500 in February 2007 to $296,400, showing evidence of builders’ efforts to match pricing to the market and clear out standing inventory.
Inventory remained at 9.8 months supply, unchanged from January’s revised figures, and 21 percent above the rate of 8.1 months a year ago. Median number of months on the market was up to 7.2 months from 5.2 a year ago.
The good news in the report is that it wasn’t as bad as analysts thought it would be.
“The consensus was that sales would come in at 575,000, and January’s number was revised upward by about 2 percent,” says Celia Chen, director of housing economics for Economy.com. “But the housing market still looks very weak. Sales prices are falling. Inventories remained stable over the last couple of months. There’s some stability, but at a bad level. I don’t really see signs of bottoming yet.”
Much of the weakness, Chen says, is the result of the tight credit market. “If someone wants to buy a house, it’s hard to get a mortgage loan unless you have stellar credit and good income – and the job situation has become worse in the last since months. It’s not a pretty picture right now.”
Chen cautions that the numbers in the report are preliminary and have a wide margin of error, evidenced by wide monthly swings in median sales price and monthly revisions.
“You do need to take the data with a grain of salt,” she says. “What I try and look at is trends. You’ve got seven months of falling home sales. That’s a pretty good indication that the market is bad.”
To view the entire report, visit www.census.gov/const/newressales_200802.pdf.