Every few months, I feel it’s my duty to let you know the latest about what’s going on in housing. There is simply so much off-the-wall blather, bogus data, and downright misinformation out there that if I don’t cut through it, I don’t know who the heck will!
In a nutshell, we’ve gone from housing Armageddon to a market marked by some stability. Not a big improvement. Not a huge recovery. Just some stability. But if I’m right about the future, it’s going to be a LONG time until we see a real rebound in housing prices … thanks to several forces that will temper the magnitude of any recovery.
So where do we stand right now?
New Homes:
Much Less Supply,
But Demand Still Ice-Cold
Here’s the latest data from May …
- New home sales dipped 0.6 percent to a seasonally adjusted annual rate of 342,000 from 344,000 in April. The numbers were a disappointment, considering that economists were expecting sales of 360,000. Results for the past few months were also downwardly revised by 32,000 units.
- Regionally, sales jumped 28.6 percent in the Northeast and 18.6 percent in the Midwest. They inched up 1.3 percent in the West, but fell 8.5 percent in the South, which is the nation’s largest new home market (184,000 units sold at a seasonally adjusted annual rate vs. 80,000 in the West … 51,000 in the Midwest … and 27,000 in the Northeast)
- The raw number of homes for sale continued to decline, falling to 292,000 from 299,000 in April. That’s the lowest reading going back to March 2001. The "months’ supply at current sales pace" indicator of inventory dipped to 10.2 from 10.4.
- The median price of a new home rose 4.2 percent last month to $221,600 from $212,600 in April. But on a year-over-year basis, prices were down 3.4 percent.
How do I interpret the numbers?
Yes, sales rose in three out of four regions of the country. But they declined sharply in the South, the country’s biggest new home market. So I’d say that overall, sales were a disappointment. At the same time, for-sale inventory continues to decline — a definite plus. And the year-over-year rate of home price depreciation eased.
The story in new homes remains similar to what we’ve had the past few months: Conditions are gradually stabilizing, yet showing no sign whatsoever of a vigorous rebound. And the supply of new homes for sale is back in line with the long-term historical average.
Going forward, the biggest issues remain unemployment and interest rates.
