New Home Sales Hit Record Low
"The road to a housing and economic recovery remains very uncertain," says David Crowe, chief economist for the National Association of Home Builders. "Competition from below-market-priced foreclosed and short-sale homes poses an additional challenge to the new-homes market right now.
New homes sold in January at a seasonally adjusted annual rate of 309,000. That represents a drop of more than 10 percent from the annualized rate of sales in December of 348,000 a year, and a more than 6 percent drop from January 2009's rate of 329,000 homes.
Over the last year, the housing market seemed to be recovering, and the rate of new home sales increased, especially over the summer, topping an annualized rate of 400,000 for several months.
Still, that pales next to the velocity of home sales during the boom: 1,051 new homes were sold in 2006.
Crowe expects new home sales to pick up this spring, as the federal homebuyer tax credit nears its latest expiration date. However, he says, "unseasonably poor weather across much of the country may delay the full impact of those incentives until closer to the deadline.
In the meantime, the inventory of new homes on the market continues to shrink. The seasonally adjusted estimate of new houses for sale at the end of January was 234,000. At the rate that new homes sold in January, it would take nine months to sell all those houses.
The inventory of new homes on the market has been dropping steadily since the end of the real estate boom. In January 2007 there were 536,000 new home for sale -- a 6.8-month supply at the rate of sales back then.