Sometimes, the headlines from press releases are so laughable that you are at a loss for words. Here are the headlines for new homes sales in September 2010 reported by the U.S. Census Bureau:
Sales of new single-family houses in September 2010 were at a seasonally adjusted annual rate of 307,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.6 percent (±16.9%)* above the revised August rate of 288,000, but is 21.5 percent (±13.3%) below the September 2009 estimate of 391,000.
The median sales price of new houses sold in September 2010 was $223,800; the average sales price was $257,500. The seasonally adjusted estimate of new houses for sale at the end of September was 204,000. This represents a supply of 8.0 months at the current sales rate.
Econintersect has graphed the unadjusted data for your review:
z new home construction
The unadjusted data in down both MoM and YoY. It is hard to envision a seasonal adjustment methodology which adjusts the data to show an improvement.
The media headlines will shout that new home sales are improved. When the uncertainties specified by the Census Bureau for the seasonally adjusted data are recognized, the data says:
- From August to September new home sales changed somewhere between a drop of 10.3% and an increase of 23.5%.
- From September 2009 to September 2010 new home sales changed somewhere between a drop of 12.2% and a drop of 35.5%.
There is no other way to look at these numbers with an optimistic bias, but to say that there is no sign of improvement in new home sales. A realistic view is that new home sales are declining.
The number of new residences for sale at the end of September:
Econintersect believes lower new home sales / construction is positive economic news as there is a surplus of existing homes. However, the most recent data for single family home construction has starts about 50% greater than current sales levels. New home sales must improve dramatically or there will be some builders in a world of hurt.
No Real Improvement in New Home Construction (except Apartments) by Steven Hansen