New-home sales plunge 8.3% to seven-year low

Market Watch ^ | 27 September 2007 | Rex Nutting

[shrinkermd]

WASHINGTON (MarketWatch) -- Sales of new homes dropped 8.3% in August to a seasonally adjusted annual rate of 795,000, the slowest sales pace since June 2000, the Commerce Department estimated Thursday. Sales are now down 21.2% in the past year, with no sign of a bottom in the crippled housing market. Read the full government report.

"This is just hideous," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. "This is more evidence that it's going to be a long and -- for a lot of people -- a painful process," said Mike Schenk, economist for the Credit Union National Association. "The soft housing market will be with us for a long time, at least 18 months."

August's sales pace was weaker than the 825,000 expected by economists surveyed by MarketWatch. See Economic Calendar. In addition, sales in May, June and July were revised lower.

The median sales price fell 7.5% to $225,700 compared with a year earlier, the largest year-over-year decline in 37 years. The median price can be affected by the mix of homes sold between and within regions, and the price does not include nonmonetary incentives, such as upgrades, free vacations and new cars

[cinives]

The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common. The standard error of 12.4% is so high, in fact, that the government cannot be sure in most months whether sales rose or fell.

So why don't they wait until the numbers are accurate before reporting ... oh yeah, then they couldn't bash the Bush economy.

[SengirV]

The slowest pace since June 2000. Who was POTUS then? I don’t recall the dire reports of the housing market at that time.

[Petronski]

When you worried
When in doubt
Run in circles
Scream and shout

[NVDave]

The source of the information is the Census Bureau, not the press:

http://www.census.gov/const/newressales.pdf

[RexBeach]

I believe prices were going UP in 2000. :)

[bkepley]

"This is just hideous," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics

Well la tee da...

[quant5]

We’re in for a very bumpy ride. I think we’re going to see a bad recession, I speculate similar to 1980.

[Right Cal Gal]

First thing I thought of as well.....

[Chi-townChief]

New home sales haven’t been this bad since the Clinton era.

[RockinRight]

Good way to put it...

[meowmeow]

I believe prices were going UP in 2000. :)

Really - the house I bought in 1995 had more than doubled in value by 2000. It's gone up another $100k since then.

[munin]

“The slowest pace since June 2000. Who was POTUS then? I don’t recall the dire reports of the housing market at that time.”

You are talking about the slowest housing market since the Clinton era here, I can’t remember anybody criing dire stright then, but I’m getting on, perhae my memory is slipping.
Don’t worry, after Fred is elected it will pick up again

[phs3]

First they fret about run away costs, avg, Americans wont be able to afford a home. Now when prices relax a bit, its doom and gloom about the economy.

MAKE UP YOU MINDS!!!

[pabianice]

There is a bright side to this. The onslaught of huge McMansion developments in rural areas — that devastate the countryside and saddle townies with huge tax bills for schools and services — are dying, unsold. I say, “Bravo!”

[Comparative Advantage]

I’m with you there.

[GOP Poet]

bookmark

[cinives]

The question stands - if the statistics are so inaccurate, why do we bother paying attention to them at all ?

[NVDave]

Well, that is a very valid question. What I’m getting at is that a bureaucracy pumps this crap out, month after month after month. The press just reports it - with their own spin, of course, but the numbers are the work of a bunch of bureaucrats.

The inaccuracy of the stats is a real problem, and stems from the manner in which housing sales are reported. A sale on a new home is recorded & reported when a sales agreement is signed. Of course, all these agreements have contingencies in them, first and foremost on the buyer obtaining financing.

The real problem comes about when the buyers back out of the contract (for whatever reason); the sale isn’t “unreported” well, the house merely shows up again in the inventory.

What the Census should be reporting is only houses that changed hands, as indicated by the close of escrow and the recording of a deed. At that point, all the ifs/ands/buts are past, and the deal is truly done. But see, the bureaucrats and economists think that if they have reliable numbers that come at the end of the cycle that those numbers are worse than if you have unreliable numbers at the start of the cycle.

Go figure. ;-\

[the invisib1e hand]

real estate has been in a runaway bull market for 15 + years. The lowest rate in 7 years? And that rate was, back then, the highest in how many years?