Buying & Selling: New Home Sales Continue To Tank

A few days ago, Corey from InfoHype wrote in asking if the bust was over yet. If today's news about decreasing home sales for February is any indication, I'd say the answer is "No:"

The Commerce Department reported Monday that sales of new single-family homes fell by 3.9 percent last month to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. All regions of the country except the West experienced weakness last month.The February decline followed an even larger 15.8 percent drop in sales in January, which had been the largest one-month plunge in 13 years. The back-to-back declines provided evidence that the housing market is continuing to struggle with lagging demand and a glut of unsold homes.

There are simply too many factors working against a resurgence in home buying on a nationwide level. Too many people are maxed out on credit and loans, there's too much inventory available, and prices for median homes are still too high. Marketwatch took special note of the increasing backlog of unsold homes contributing to the slowdown:

Inventories of unsold homes rose 1.5% to 546,000, representing an 8.1-month supply, the largest inventory in relation to sales since January 1991, at the tail end of a recession. The inventory is up 27% in the past 12 months.
Inventories are probably understated, however, because they don't include homes thrown back on the market due to buyer cancellations.

And as you might expect, the stock market isn't responding too favorably to the news. So it looks like we have to ride this train for a few more months at least.

InfoPath looks like a good read, by the way. Check it out. :)

Posted at March 26, 2007 01:00 PM

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A few days ago, Corey from InfoHype wrote in asking if the bust was over yet. If today's news about decreasing home sales for February is any indication, I'd say the answer is "No:" The Commerce Department reported Monday that sales of new single-family homes fell by 3.9 percent last month to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. All regions of the country except the West experienced weakness last month.The February decline followed an even larger 15.8 percent drop in sales in January, which had been the largest one-month plunge in 13 years. The back-to-back declines provided evidence that the housing market is continuing to struggle with lagging demand and a glut of unsold homes. There are simply too many factors working against a resurgence in home buying on a nationwide level. Too many people are maxed out on credit and loans, there's too much inventory available, and prices for median homes are still too high. Marketwatch took special note of the increasing backlog of unsold homes contributing to the slowdown: Inventories of unsold homes rose 1.5% to 546,000, representing an 8.1-month supply, the largest inventory in relation to sales since January 1991, at the tail end of a recession. The inventory is up 27% in the past 12 months. Inventories are probably understated, however, because they don't include homes thrown back on the market due to buyer cancellations. And as you might expect, the stock market isn't responding too favorably to the news. So it looks like we have to ride this train for a few more months at least. InfoPath looks like a good read, by the way. Check it out. :)