New home sales hit a five-month low in June, falling to a seasonally adjusted annual rate of 350,000, the Census Bureau and Department of Housing and Urban Development reported jointly Wednesday. Economists had expected sales to inch up slightly from the preliminary sales report in May. May sales were revised up to 382,000 from the originally reported 369,000.
Both the average and median price of a new home fell in June from May. The median price was also down from June 2011 while the average price was up slightly.
New home sales jumped to 369,000 in May—the highest level since April 2010—as the median and average home prices both dropped, the Census Bureau and HUD reported jointly Monday. Economists had expected sales to reach 350,000 from the prior month’s 343,000.
Sales increased 7.6 percent month-over-month, the first increase in three months, and were up 19.8 percent since May 2011.
The median price of a new single family home fell for the third straight month, dropping to $234,500, the lowest level since February. The median price is up, however, 5.6 percent from May 2011. The average price of a new home fell, as well in May, dropping 3.5 percent to $273,900, the second consecutive monthly decline. The $10,000 month-over-month drop in the average price was the largest since last August. Year-over-year, the average price is up 4.3 percent, or $11,200.
Last week, the National Association of Realtors reported existing home sales dropped to 4.55 million in May, while the median price of an existing home rose to $182,600. Unlike the report on existing home sales, which is based on completed transactions (closings), new home sales report is based on contracts signed that could be cancelled.
The report on new home sales is more reflective of economic conditions in the month covered by the report, while the report on existing home sales reflects economic conditions two months earlier. The Census-HUD report hints at higher existing home sales in July.
In May, according to the National Association of Home Builders’ monthly survey, the buyer traffic index rose to 23 (out of 100) from 18 in April. According to a separate Census-HUD report issued last week, builders completed 458,000 new homes in May, down from 489,000 in April but still more than reported sales in May.
About 39 percent of new homes sold in May carried prices of $199,000 or less, up from 37 percent in April. According to the report, 14 percent of new homes sold in May had prices of $400,000 or more, down from 18 percent in April.
Sales improved month-over-month in two of the four census regions, increasing in the Northeast and South while dropping in the Midwest and West. Year-over-year, sales fell only in the West.
According to the Commerce Department, the inventory of homes available for sale at the end of May rose to 145,000 from 144,000 in April. Based on the sales pace, the months’ supply of new homes for sale dropped to 4.7 in May—the lowest level since October 2005—from 5.0 at the end of April.
Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.
Still, economists say it could be years before sales rise to a healthy rate of 600,000 units a year. "The percentage rise in sales looks impressive but 10 percent of next-to-nothing is still next-to-nothing," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, referencing the December increase. "New home sales are bouncing around the bottom and we see no clear upward trend in the data yet." Builders of new homes are struggling to compete in markets saturated foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases.
Home prices fell in November in 19 of 20 major cities measured by the Standard & Poor's/Case-Shiller index, and nine of those cities fell to their lowest point since the housing bust.
Economists expect prices will keep falling through the first six months of this year. Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries.
On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Associated of Home Builders.
The median price of a new home rose to $241,500 in December, up from a November median of $215,500. For all of 2010, the median sales price was $221,900, up 2.4 percent from the 2009.
For December, sales rose in all parts of the country except the Northeast, which saw a 5 percent decline. Sales surged 71.9 percent in the West and were up 3.2 percent in the Midwest and 1.8 percent in the South.
Sales of new single-family homes rose 6.6 percent to a seasonally adjusted annualized rate of 307,000, which is stronger than the 300,000 that economists expected in a MarketWatch-compiled poll.
On Monday, a report showed sales of existing homes also were stronger than expected, rising 10 percent, and the two reports lend support to some economists who believe housing demand hit a bottom in late summer.
"After dropping precipitously following the expiration of the first-time homebuyer tax credit, it looks as though new home sales have stabilized," said Nicholas Tenev, an economist at Barclays Capital. "We expect a gradual recovery over the coming months."
Still, the pace of new-home sales is 21.5 percent below the same level of last year.
The pace of new-home sales also is considerably below the 414,000 rate in April, when the market was buoyed by a tax credit that has since expired.
There's also still plenty of supply, with the government estimating supply of 8 months of unsold homes, though that's down from 8.6 months in August. The stock of unsold houses fell 1 percent from August and dropped 19 percent from Sept. 2009.
"With little new construction going on, inventories of unsold new homes at least aren't a problem even with sales at such a severely depressed level, with the number of new homes for sale extending a run of record lows," said David Greenlaw, an economist at Morgan Stanley.
The median sales price rose 1.5 percent from August and 3.3 percent from Sept. 2009 to $223,800 — about 30 percent above the median price of an existing home.
The margin of error for new-home sales is a considerable plus or minus 16.9 percent.
September's housing market was only partly affected by a foreclosure moratorium of some leading lenders, which gathered pace in October.
New-home sales, by definition, wouldn't be affected by foreclosure disputes and in fact could benefit by virtue of purchasers getting "clean" title when buying new properties.
(c) 2010, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
California new and existing home sales totaled 33,176 in September, down 17.5% from a year ago and 3.1% from the previous month, according to the San Diego-based real estate provider DataQuick. Despite record low mortgage rates, the entire housing market is still waiting for new demand to replace the boost from the homebuyer tax credit that expired in April. While transactions are down, prices are still up for the 11th month in a row, following more than two years of straight declines. The median price on a California home was $265,000, a 5.6% increase from last year and a 1.9% bump from the previous month. The trough came in April 2009 at $221,000. The peak was $484,000 in early 2007. Of the existing home sales completed in September, 35.8% were properties that had been foreclosed on in the last year, down from 41.7% a year ago and flat from the previous month. Foreclosure accounted for more than 58% of the market in February 2009, the all-time high. Homeowners made an average $1,055 monthly payment in September, down more than 60% from the peak in June 2006.