Little Hope for the U.S. Housing Market
Jon D. Markman
Aug 31, 2010
Jon D. Markman writes: Just when you thought the housing market couldn’t get worse, it did.
New single-family home sales slumped 12.4% in July to a record-low annual rate of 276,000 units, as homebuyers shunned their realtors in the absence of government support. The consensus expectation was for a slight up-tick to a 333,000 unit annual rate, so I suppose it’s time to throw out the models. Sales over the prior three months were also revised lower by 9,000 units.
No section of the country was spared, though the West led the parade with a 25.4% plunge. On a year-over-year basis, sales were down 32.4%, the fastest decline since April 2009.
New home inventories held steady at 210,000 units, the lowest level in 42 years, according to Ned Davis Research analysts. Low-to-medium-priced homes were in the most demand. Only properties in the $150,000 – $300,000 price range rose as a share of total sales. So median prices fell to the lowest level since 2003.
Put the existing and new home figures together and the final picture is that total home sales have fallen off a cliff – not just absolutely but also compared to previous housing market recoveries, according to NDR. And furthermore, the trend has reversed to negative for the first time in a year – a fact that will weigh on economic growth through the end of the year at least.
It’s gotten so bad that we need a new word to describe the buyers’ strike that’s going on in the market for new and existing homes – some combination of fiasco, conflagration, and abyss.