I can remember arguing with other pundits in mid 2008 about an economic reset which was occurring at that time which I had named “new normal”. The reset was triggered by the combination of the aging of the population (baby boomers) combined with the high debt load they were carrying.
A few saw a crisis coming (see Twelve Who Forecast the Financial Crisis) , but literally no one actually foresaw the exact combinations of events – currency, debt, interest rates, housing, equities, bonds – or the behavior of the economy once the initial destruction subsided.
The complete and continuing collapse of the new house market more than four years after the first signs of the collapse of the housing bubble is one element not foreseen. New housing sales data released for October 2010 shows new home sales below levels seen since Census records began in 1963. The headlines:
Sales of new single-family houses in October 2010 were at a seasonally adjusted annual rate of 283,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.1 percent (±16.1%)* below the revised September rate of 308,000 and is 28.5 percent (±12.6%) below the October 2009 estimate of 396,000.
The median sales price of new houses sold in October 2010 was $194,900; the average sales price was $248,200. The seasonally adjusted estimate of new houses for sale at the end of October was 202,000. This represents a supply of 8.6 months at the current sales rate.
Econintersect views unadjusted data. The graph of sales since 2005 tells the story with no narrative necessary.
The unadjusted data concurs that there is 8.6 months of inventory at the current sales rate.
The record low levels of new home sales have even greater historic perspective when adjusted for inflation.
Housing Price Decline Continues by Steven Hansen
Demand for Housing Near an All-Time Low by John Lounsbury
Unemployment and Foreclosures by John Lounsbury