New Home Sales: Downward Revisions
A: While not a dataset that affects Manhattan, New Home Sales were released this morning and the data wasn't pretty. Sales of new homes plunged to their lowest level in 12 years, and were weaker than already beaten down expectations. As a result, inventories of unsold homes in markets already struggling rose even further. As a leading indicator, this pretty much locks in that housing data will continue to be very gloomy for the next few months.
According to CNN Money:
New home sales tumbled 9 percent in November to a seasonally adjusted annual rate of 647,000, according to a Census Bureau report Friday. That was the worst showing since April 1995, when the pace of sales was 621,000, and is much worse than the 715,000 sales pace forecast by economists surveyed by Briefing.com.Thanks to Calculated Risk, we can see a visual of the carnage going on in the new home sales sector that has caused so much pain for the homebuilders, whose debt ratings were recently downgraded by Moodys (debt of Lennar & Centex downgraded to junk status in October):The sales pace is down more than a third from year-ago levels. Furthermore, the decline is widespread nationwide, ranging from a 28 percent drop in the Northeast to a 38 percent plunge in the Midwest. And the glut of new homes on the market rose to a 9.3-month supply, as the number of completed homes for sale reached a record 193,000 at the end of the reporting period. Builders now typically have to wait 6.2 months to sell a completed home, the longest wait since July 1993.
Downward revisions to new home sales were also made to August, September & October! I wonder what the NAR has to say about this report after they estimated 4th Quarter New Single Family Home sales to be 718,000 (some 71,000 sales too optimistic or 10% off); I'm betting its a positive spin. For new home inventories, we now have a supply of 9.3 months worth of homes given the current sales pace & inventory levels.
CR expects this report to be further revised downward in the months to come as, "...This is another VERY weak report for New Home sales. All revisions continue to be down. This is the fourth report after the start of the credit turmoil, and, as expected, the sales numbers are very poor."
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