The U.S. Census Bureau released its New Residential Sales report for October which states:
Sales of new one-family houses in October 2006 were at a seasonally adjusted annual rate of 1,004,000, according
to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban
Development. This is 3.2 percent (±11.2%)* below the revised September rate of 1,037,000, and is 25.4 percent
(±10.0%) below the October 2005 estimate of 1,346,000.
The median sales price of new houses sold in October 2006 was $248,500; the average sales price was $309,700.
The seasonally adjusted estimate of new houses for sale at the end of October was 558,000. This represents a
supply of 7.0 months at the current sales rate.
The news shows this morning are focusing on the 3.2% drop from last month. Month to month numbers include seasonal variability, and are not as informative as year-over-year. The year-over-year 25.4% number is more the more significant number. It is also worth noting that these numbers are typically revised every month. This is what the year-over-year change in sales chart looks like:
The Census Bureau defines a sale as "
a deposit taken or an agreement signed." It is worth noting that in areas formerly known as "hot"-
cancellation rates are running around 40%, so it would be expected that a large number of these sales will not close. The Bureau does not adjust for cancelled sales. Sales are not keeping pace with construction. In October of 2005 there was a 4.5 month supply of homes on the market.
That has climbed to a 7 months supply in October 2006.
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