Housing Number Mixed
New homes fell 11.3% in November to a seasonally adjusted annual rate of 355,000 as a popular tax break for first-time homeowners was set to expire, the Commerce Department estimated Wednesday.
It was the lowest sales pace since April and followed months of steadier sales boosted by the tax break that was set to expire on Nov. 30.
Buyers would have had to sign a contract on a new home by early October at the latest in order to receive the original tax credit, which was ultimately extended until June and expanded to include repeat buyers.
New home sales are recorded when a contract is signed, not at closing, as existing-home sales are. On Tuesday, the National Association of Realtors reported that resales popped 7.4% in November as buyers rushed to complete sales ahead of the deadline.
“The housing recovery is far from becoming self-sustaining,” wrote Anna Piretti, an economist for BNP Paribas. “The current rebound remains very much dependent on government support.”
November’s sales were far weaker than the 421,000 expected by economists surveyed by MarketWatch. See our complete economic calendar and consensus forecast.
October’s sales pace was revised lower to 400,000 from the 430,000 earlier reported.
Sales were down 9% compared with last November. Through the first 11 months of 2009, 349,000 homes had been sold, down 24% from the same period a year ago.
Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn’t sure whether sales rose or fell. The standard error in November, for instance, was plus or minus 11%. Read the full government report.
The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 395,000 seasonally adjusted annual pace, down slightly from 404,000 in the five months ending in October.
Home builders continued to slash their inventories of unsold homes. The number of unsold homes dropped 2.1% to 235,000, the lowest in 38 years. The number of homes for sale that are under construction or not yet started fell to a record low.
Builders have cut back on production of new homes, but still face stiff competition from unsold existing homes as foreclosures continue to mount up.
At the November sales pace, it would take 7.9 months to sell the inventory, up from 7.2 months in October.
Once a home is completed, it’s taking 13.6 months to sell it, a reflection of the mismatch between the more expensive homes in the inventory and the lower priced homes that have been selling.
Very expensive homes did sell better in November, however, with the market share of homes costing more than $750,000 rising to 5% from 2% in October. Forty-five percent of sales were for less than $200,000 and 76% were for less than $300,000.
The median sales price of a new home sold in November was $217,400, down 1.9% in the past year.
Sales fell in three of four regions, led by a 21% drop in the South to a 19-year low. Sales fell 9% in the West and 3% in the Northwest. Sales increased 21% in the Midwest.
In a separate report, the Commerce Department said income from wages and salaries rose a seasonally adjusted 0.3% in November, pushing total income growth to 0.4%. Real spending increased 0.2% in November. See full story on the income and spending data.
Also, consumer sentiment improved slightly in December, but consumers are still anxious about their own finances, according to the University of Michigan/Reuters survey released Wednesday. See Economic Report on consumer sentiment.
Rex Nutting is Washington bureau chief of MarketWatch.