New-Home Sales Data More Grim News for U.S. Economy
More clear evidence of growing distress in the housing market came from a Jan. 29 U.S. Commerce Department report showing that sales of newly built single-family homes slid 14.7% to a seasonally adjusted annual rate of just 331,000 in December, the lowest monthly pace on record. Sales in December were down 76% from their market peak in 2005.
"What more proof do you need that the housing downturn is accelerating — bringing down the economy with it — and that the government must take substantive action to get qualified buyers back in the market?" asked Joe Robson, the newly elected 2009 chairman of NAHB.
"We need a significant stimulus on the demand side, because otherwise, home sales will only continue downward, dragging down home values, consumer confidence and consumer spending, which in turn creates further downward pressure on sales," Robson continued. "Because this vicious, self-perpetuating cycle can only be curtailed by offering a real incentive to those on the sidelines, NAHB is urging Congress to substantially enhance and extend the $7,500 first-time home buyer tax credit as part of the economic stimulus package that it plans to send to the President's desk within the next two weeks. Doing so would go a long way toward putting a floor under declining home values that are at the core of the current economic crisis."
"Clearly the housing downswing is worsening, and even historically low mortgage rates have not provided sufficient support to the marketplace," noted NAHB Chief Economist David Crowe. "Even the recent uptick in existing home sales is no source of comfort, since this movement is driven by distressed and foreclosed homes that continue to flood the market at fire sale prices, resulting in further deterioration in home values.
"The only positive note in the December report is that, due to prudent home builder action to restrain production, the number of new homes for sale continues to decline," said Crowe. "But even as this happens, the months' supply of homes on the market continues to rise, due to further slowing of sales activity. Basically every number in this report further bolsters the argument that substantive government action must be taken to stimulate housing demand, restore home values and revive the U.S. economy and job market."
The inventory of new homes for sale declined for the 20th consecutive month in December to 357,000, while the months' supply at the current sales pace increased for a third consecutive month to 12.9.
New-home sales were down across every region of the country in December, with declines of 28.2% in the Northeast, 5.6% in the Midwest, 12.1% in the South and 20.2% in the West.
For 2008 as a whole, sales were down 38% across the United States, falling 50% in the Northeast, 31% in the Midwest, 46% in the South and 47.4% in the West.
Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.