Dennis Norman
My Mantra
As has been my long-running mantra, I don’t like “seasonally adjusted” numbers and “rate” of sales. Why, for one I can’t figure out how in the world they compute the numbers. Second, I just don’t think discussing 
the “rate” of new home sales paints a realistic picture of the market. I think this holds especially true when we have artificial forces affecting the housing market such as tax credits and other incentives. This can create unseasonal bursts or declines in sales that don’t really have anything to do with the underlying fundamentals of the housing market.
Here is the raw data, the ACTUAL new homes sold- no fluff, no “adjusting”
- 21,000 new homes sold in December, a 12.5 percent decrease from December”s 24,000 new homes sold and also a 12.5 percent decrease from January 2009 when there were 24,000 new homes sold.
- 52 percent (11,000) of the new homes sold were in the South region- a decrease of 15.3 percent from December’s 13,000 new homes sold
- the west region had 5,000 new homes sold, the same as each of the two months before.
- the Midwest had 3,000 new homes sold, the same as December.
- The Northeast had 2,000 new homes sold, a decrease of 33 percent from December’s 3,000 new homes sold.
- Median sale price of new homes in the US in January was $203,500, an 8.7 percent decrease from December’s median new home price of $221,300.
- New Homes in the US in January have been for sale for a median time of 14.2 months since the homes were completed; this number has been increasing every month.
- Inventory of new home in US at end of January is 233,000, down slightly from December’s inventory of 234,000 homes.
My prediction for 2010
I am really an optimistic person by nature, but I can’t help but be pessimistic about the outlook for new home sales this year. The announcement by the Fed that they may stop buying mortgage-backed securities soon is going to most likely lead to higher interest rates: The HomeBuyer tax credit is set to expire April 30th and I doubt will get extended again. Both these events are going to have a negative impact on the housing industry and are going to put even more downward pressure on the housing market. Not to mention the effect of record foreclosure rates, record numbers of people underwater on their mortgages and the like.
Therefore, even though it is still very early in the year, I’m going to downwardly adjust my prediction of new home sales this year. I’m going to estimate that we are going to see a decline in new home sales from last year of 5 – 10 percent which would put us at about 336,600 – 355,000 new home sales in 2010.
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