January 31st, 2009 by Michael Oliver

Share This Post

The new home sales stats are in for December and just like everyone expected sales were down. On a monthly percentage they were down 14.7% the worst monthly decline since 1994. To add some “color” to the stats The Commerce Department stated sales fell to a 331,000 annual pace and that’s makes it the lowest annual pace since they started keeping track in 1963. You know when you start hitting the lowest statistical levels for almost ALL RECORDS being kept ever to me this means we’re flushing all excesses and speculation (if there was any in the past year its gone now) completely out of the system. (Keep in mind existing home sales are currently at extremely low levels and price declines are worst on record, at least going back to the Great Depression.)

In Tucson this new home report rings very true, all the builder reps I speak with tell me it’s horrible and their builder is willing to work with anyone to make a deal happen. In fact I was in Rancho Sahuarita with a client this week who is considering having a new home built and the builder rep has (in my mind) done everything but give the damn home away for free. I’m talking financing incentives, lot premiums waived, (for nice lots not junk!) additional structural options thrown in free, plus additional incentive money to be used for anything the buyer wants. The deal is really pretty hard to pass up. I think this is the new rule the home builders have come to having to do to turn sales. Previously (as little as 24 short months ago) the builders (most notably KB Home) had a “you need us more then we need you attitude”. They would just make decisions and tell buyers “tough” this is the way it is but across almost all the homebuilders in the Tucson area upper management has been replaced or cut and the new thought process (has been for about 6 months now) is to completely cater to the buyers. In fact honestly speaking it seems like their going too far. I know first hand that when they have to give away all these incentives and at current prices the builder has to be breaking even on these homes (at best!). In this market I guess it’s better for the builder to keep things moving then to shut down completely. In any even here’s the report from www.cnbc.com explaining the new home sales report that just came out.

Sales of newly built U.S. single-family homes fell 14.7 percent in December, the largest monthly decline since 1994, data showed on Thursday, indicating the housing market’s downward spiral was far from reaching a bottom.

The Commerce Department said sales tumbled to a 331,000 annual pace, the lowest since it started keeping records in 1963.

November’s sales were sharply revised down to 388,000 annual rate, which was previously reported as 407,000.

Economists polled by Reuters had forecast sales would post a 400,000 rate in December.

For 2008, sales totaled 482,000, the lowest since 1982. That represented a 37.9 percent drop on the prior year, also a record fall.

The median sales price in December fell 9.3 percent to $206,500 from a year earlier.

The median marks the half-way point, with half of all houses sold above that level and half below. The inventory of homes available for sale was at 357,000.

The December sales pace put the supply of homes available for sale at 12.9 month’s worth was a record high.