October’s new-home sales figures, released the day before Thanksgiving, left builders with little reason to be thankful this holiday.
According to the U.S. Census Bureau, new-home sales slid 8.1% to a seasonally adjusted pace of just 283,000 units, which is among the third lowest monthly readings since the government began collecting such data in 1963, according to Patrick Newport, U.S. economist at IHS Global Insight in Lexington, Mass. On a yearly basis, new-home sales activity is down 28.5% compared to the same month one year ago.
Other figures measured in this monthly report also fell to historically low levels, Newport said. Builders had just 202,000 homes in inventory in October, which is the fewest since 1968. (Still, with sales at such depressed levels, that translates into a supply of 8.6 months.) The median price of a new home also declined to $194,900, which is the lowest such figure since 2003, several years before the housing’s peak.
However, the amount of time that new homes are on the market before selling does appear to be dropping. While it took an average of 14 months to sell a new home in 2009, that figure has been reduced significantly, with new homes being for sale for 8.3 months before being sold, based on Census data.
For comparison, sales of existing homes also declined in October, falling 2.2% after two months of growth, according to the National Association of Realtors (NAR). Distressed properties continue to be a major part of the existing-home market, contributing 34% of sales in October. That of course puts ongoing pressure on prices of new and existing homes, with the NAR reporting a median existing-home price of $170,500 in October.
Alison Rice is senior editor, online, at BUILDER magazine.