New Home Sales Plunge 11.2 Percent; Prices Down 7.5 Percent

In January, new home sales fell 11.2 percent to an annualized pace of 310,000 units. This was the fifth decline out of the past six months. This followed a general upward trend that peaked last summer. The sales pace in January was the lowest on record (past 47 years) surpassing the recent low of last January. The drop-off over the month was likely due in part to the continuing declining effect of the homebuyer tax credit coupled with greater competition from foreclosures and fire sales. Sales were also likely driven down due to the worse than normal weather through much of the country. From a year prior, sales were down 6.0 percent.

The median sales price fell 7.5 percent, following a smaller decline of 0.5 percent in December. However, even with this large monthly decline, prices were up 4.5 percent from a year prior.

At the current sales pace, the months supply of inventory of homes for sale rose to 9.1 from 8.0. The ratio had been falling steadily through October; however this has moderated over the past three months as sales have declined. Before new home prices solidly form a bottom, it is likely that the inventory ratio will have to approach the historical average of around 4.5 months.

	Jan	Dec	Nov	Oct	Sep	Aug
Sales (millions SAAR)	0.31	0.35	0.36	0.4	0.39	0.41
% change	-11.2	-3.9	-9.5	2.3	-4.2	-2.6
Median Price (‘000s)	$203.40	$219.90	$220.90	$214.70	$217.30	$210.20
% change	-7.5	-0.5	2.9	-1.2	3.4	-0.9
Months Supply	9.1	8	7.8	7.3	7.7	7.7

10.02.24 (Source: Census Bureau)