New Home Sales at fell to lowest level ever recorded... again

New home sales fell 12.4% in July to 276,000 units (the lowest level in the 47-year history of the series). Sales fell sharply in all major areas with the largest decline recorded in the West.  Of course, last month we said the same thing, but what can I say... we are on a roll. 

The supply of new homes was unchanged at 210,000 in July, the lowest since September 1968. However, the supply of new homes in relation to sales rose to 9.1 months in July from 8.0 months in June.


Completely expected and rational behaviour from the homebuyers who are extremely pessimistic on the price of their homes.  Just last year, people were being told that the worst was over.  We were saying otherwise.   In fact, we are on the record saying that it is our expectation that housing has not finished falling and there could be aanother 10-20% fall.  Of course, predictions are a fools game, but as a mortgage trader, I don't see anything that changes my pessimistic attitude. 

In the months following the expiration of the homebuyers’ tax credit, new home sales have been extremely volatile and we are likely to see similar trends in the existing home sales data. The record low level of new home sales may be exaggerated by the fact that sales were borrowed forward ahead of the end of the tax credit in April and we are now seeing give back. However, this report illustrates that conditions in the market for new homes remains quite miserable, which is also the message of the sales series from the National Association of Home Builders’ survey.


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