February 24, 2011
U.S. New Home Sales: Down 18.6% Year-Over-Year In January
The pace of new single-family home sales in the U.S. fell 12.6 percent from a revised annual rate of 325,000 in December 2010 to 284,000 last month, down 18.6 percent versus the 349,000 rate recorded in January 2010.
Preliminary U.S. new home sales (versus pace) in January 2011 were estimated to be 19,000 (give or take 8 percent), the lowest January on record going back to 1963.
In the West, the pace of new home sales fell 15.4 percent on a year-over-year basis to 66,000, down 36.5 percent versus December 2010.
∙ U.S. New Home Sales: Down 7.6% In December (YOY), 14.2% in 2010 [SocketSite]
∙ New Residential Sales: December 2010 [census.gov]
∙ New Residential Sales Since 1963 [census.gov]
First Published: February 24, 2011 8:45 AM
Comments from "Plugged In" Readers
That's a sign of massive overbuilding on a national level. The hangover is not over yet.
Posted by: lol at February 24, 2011 9:02 AM
What it's a sign of is the fact that nobody is currently building anything. Until prices stabilize, and people have jobs, new home construction is dead, and new home sales will be necessarily constricted. And given how crazy the building boom was a few short years ago, that's a good thing.
Posted by: curmudgeon at February 24, 2011 9:23 AM
Most people have jobs, and many do qualify for a mortgage at the current low interest rates. The issue is that between a 250K basic brand new house and a 150K 2006 one, people are picking the latter, and there's plenty of inventory to choose from.
Distressed sales are simply killing the new home market.
Posted by: lol at February 24, 2011 9:28 AM
…nobody is currently building anything. Until prices stabilize, and people have jobs, new home construction is dead…
Actually, construction started on more homes than generally expected in January, if you consider multi-family homes. From the socketsite editor's seemingly preferred news source, Bloomberg, dateline Feb 16, 2011:U.S. Housing Starts Rise More Than Economists Forecast on Multifamily Jump, second 'graph:
Housing starts climbed 15 percent to a 596,000 annual rate, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 539,000 rate. Work started on 78 percent more dwellings with two or more units, overshadowing a drop in single-family houses that indicates the housing market continues to struggle.
So if you were talking about SFH's, then, yes, few new units are being built. And I agree that fewer McMansions being built way out in Mountain House is an improvement.
For me, the more telling stat would be the change in the number of currently licensed and practicing real estate agents and mortgage brokers. When people stop running around trying to be commission-seekers, flippers and speculators and flingers of dogy loans to be sold off and sliced and diced into CDOs, that's when you'll know the bubble is really deflated.
Posted by: Brahma (incensed renter) at February 24, 2011 9:44 AM
Note the 284k pace is seasonally adjusted, while the 19k Jan number is not seasonally adjusted.
Posted by: tc_sf at February 24, 2011 10:39 AM
It's interesting and all but are "New" SFRs really a significant factor in the San Francisco market?
Posted by: Jimmy (No Longer Bitter) at February 24, 2011 10:43 AM
The simple reality is that in most circumstances it costs more to build a home right now than it costs to buy the existing home next door that is REO.
Posted by: Rillion at February 24, 2011 10:59 AM
I've said this before, but homes are purchased with income, savings, or credit.
therefore, home sales are positively affected by increased in income, savings or credit.
conversely, obviously they are negatively affected by decreased income, savings and credit.
the problem in the US is that we have had progressive hollowing out of the middle class in terms of real income over the last several decades, and it is worsening.
for a short time, this was patched over by increases in credit.
knowing this, our leaders blew a credit bubble to keep the game going. (credit access overcame loss of savings and income to the masses, so they 'felt' richer than they were and spent accordingly)
but that bubble burst, and we continue to be in the midst of the undwind of that credit bubble.
in order to restart housing, we must get prospective buyers either higher income, more savings, or increased access to credit.
higher incomes are unlikely for the vast majority. our leaders are not bothering to even attack the income issue... instead they propose further actions to worsen income inequality. the problem with this is that the super rich can only spend so much. (Trickle down theories are a bunch of hoo-haw to give cover to the war against the middle class).
this is of course exacerbated by globalization and global wage arbitrage, which again our learders are ENCOURAGING.
or outright attacking people who do have income. Witness Wisconsin. do you think that obliterating the bargaining power of teacher's unions will increase or decrease income of teachers? once done, do you think those teachers will have more or less income with which to buy housing?
you see? we are attacking the earning power of middle class America.
(I'm not discussing if "right" or "wrong", only showing the forces causing suppression of wages in the USA. others would say that the reduce in teacher wages will help offset taxes, but this is unclear to me especially since the budget issue in WI is more related to tax breaks to wealthy that didn't help the middle class person).
thus... looks like no aggregate income increase anytime soon in America for anybody outside the elite.
as for savings: unlikely to get significant aggregate savings for the vast majority of Americans because their wages are stagnant or falling and the cost of living continues to increase. $100/bb oil is not going to help us save any. neither is the rampant commodity price increases.
one thing that would help is if we did debt restructuring... however our leaders are against this as it would cause creditor losses. thus, they resist debt restructuring in any meaningful way.
thus, increased savings outside the rich are unlikely.
last, is access to credit. the Govt has done as much as it seems willing to do on this front, at least for now. they have expanded FHA, Fannie, Freddie, and enacted zero interest rate policy. but how do you expand credit any more, given what we just left? we "need" to drop back to No Income No Job lending if we are to extend the credit "needed" to boost housing, and that is foolish/crazy at best.
thus: we are in a quandry. no visible sign of appreciable increase in aggregate income, savings, or credit access to the masses... only to the parasite rentier class. (TBTF banks etc).
this is what many people didn't understand in 2007 when I started talking about the "great recession" and used the "like watching the paint dry on a painting of grass growing" analogies.
I wasn't kidding when I said it could take a decade OR decades, nor when I said that the Japanese experience may be a "best case" for us.
all that said...
as I've said for a few months now, we will soon likely enter the next so-called "Seldon moment". I thought it would hit this spring around April or May, but the commodity bubble may be moving that forward, as is the political upheaval around the world.
remember, Seldon moment does NOT mean crash. it is the next point where a few decisions by a small number of people (our economic/political leaders) will have a major impact on future events. to know the future one must know the minds of our leaders.
Posted by: ex SF-er at February 24, 2011 11:00 AM
The next meaningful moment in history is going to be March 4th, when the Federal government shuts down.
2011 = 1937 all over again.
Posted by: Jimmy (No Longer Bitter) at February 24, 2011 11:27 AM
Love SS, but sometimes I find the writing to be unnecessarily complicated.
I'll give $100 to anyone that can diagram the first sentence in this post.
And please think of significant figures & relevant data. Why 18.6% when 19% tells the story? And the raw numbers for Dec and Jan 2010 seem superfluous if you are providing the Jan 2011 raw number and percent changes.
That first sentence, simplified: “The annual pace of new single-family home sales in the U.S. was 284k in January, down 19% from last January, and down 13% from the downwardly-revised December 2010 pace.”
End of nitpicking.
Keep up the great work!
Posted by: MondoMe at February 24, 2011 11:34 AM
Ex-SFer...thanks as always for illustrating the big picture so well. I'm in 100% agreement.
I've been harping about income inequality to anyone who would listed for years now. It's interesting that it FINALLY seems to be entering the public discourse. For instance, some of the wonky and frightening income inequality charts (originating from Mother Jones of all places) were highlighted on yahoo's home page yesterday, and I note they were widely crossposted on facebook.
About time people started realizing what's going on.
And to bring it back to this forum....there will certainly never be a wide-scale recovery in real estate until that income inequality begins to narrow, and people in the middle and bottom (hell, even the upper middle..) have some spare change to buy something with.....
Posted by: curmudgeon at February 24, 2011 12:15 PM