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New home sales and prices slip in March; both still better than a year ago

dennis-norman-st-louis-realtor-real-estate-new-home-salesToday, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data forMarch 2012 showing a decrease of 7.1 percent from the month before, and an increase of 7.5 percent from a year ago. The seasonally-adjusted new home sales rate for March was 328,000 homes, down from a revised rate of 353,000 homes the month before. It’s worth noting that February’s sales were originally reported by the Commerce Department to be 313,000, so the revision to 353,000 was significant. So, in the end, March may not look so bad either if the revised numbers follow suit with the month before.

The supply of new homes on the market increased to a 5.3 month supply from 5.0 months the month before. The median new home price decreased 1.0 percent for the month to $234,500 from a revised median price of $236,900 the month before but increased 6.3 percent from a year ago when the median new home price was $220,500.

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.

Here is the raw data, the ACTUAL new homes sold- no fluff, no “adjusting” For March 2012:

  • 32,000 new homes sold, up from 28,000 the month before and up from 28,000 a year ago.
    • As usual, the South had the majority of the new home sales (although an even bigger share than normal this month) with 20,000 this month (62.5 percent of the total in US)
    • the west region had 6,000 new homes sold.
    • the Midwest had 3,000 new homes sold.
    • The Northeast had 2,000 new homes sold.
  • New Homes in the US in sold during the month been for sale for a median time of 7.8 months since the homes were completed, up from 7.6 months the month before.

What’s in store for 2012?

Mortgage delinquency rates and foreclosure rates still continue to fall which will begin lessening the downward impact on home prices foreclosures put on the market, which will be the first step toward stabilizing prices. I think it’s going to be a long process to get us back to the point where where existing home prices will increase to the point that there is not such a giant premium to pay for a new home as there is today, therefore I’m going to forecast a modest increase and am expecting to see somewhere between 304,000 – 334,000 new homes sold in 2012.