Housing Armageddon: New home sales fall 17% in Feb, median prices fell 14% in one month

Everyone's underwater now. 

For those who haven't been reading this blog daily, we have been calling for a decline in housing since the day we first put up our online shingle.  This report is perhaps the worst month on month report I have seen at least 2008.  New home sales fell in one month 17%, prices dropped almost 14%.

The new home market has to compete with distressed sales of existing homes. There is a billboard outside our office for Ivory homes which offers an incentive to pay for 3 years of leases on a homeowners existing home, if they buy a new home with Ivory.  It is similar to the following from their website, via Ivory homes:

This is complete desperation from the homebuilders.  

Why are they desperate?  Short sales and REOs make up almost 40% of all home purchases. Try selling a new home, when banks are giving used properties away at deep discounts.

Today, new home sales with fell 16.9% in Feb to an annual rate of 250K, which is way below the 290K expected. All regions show declines. The data are filled with multi-year lows and record lows including unadjusted sales in the month of only 19K units.

The median price fell 13.9% in the month to $202K, a drop that destroys the housing-bottom crowd as the year-on-year rate fell to -8.9% percent. The mean (average) price dropped to $246K, which is down 7.3% for the month for a 13.4% YOY.

Supply on the market rose to 8.9 months at the current sales rate vs. Jan's 7.4 months and compared against 8.0 months in February last year. There were an adjusted 186,000 new homes on the market in February, not quite half of the long-term trend of 300,000.Via Census:
Sales of new single-family houses in February 2011 were at a seasonally adjusted annual rate of 250,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 16 9 percent 16.9 (±19.1%)* below the revised January rate of 301,000 and is 28.0 percent (±14.8%) below the February 2010 estimate of 347,000.

The median sales price of new houses sold in February 2011 was $202,100; the average sales price was $246,000. The seasonally adjusted estimate of new houses for sale at the end of February was 186,000. This represents a supply of 8.9 months at the current sales rate.


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