New Home Sales Jump… Surge… Soar… Hop or just Mosey Along?

The Commerce Department report on new home construction came out this morning - with all the excitement of watching for your horse to cross the finish line. About the same time Robert Shiller, of the Case Shiller HomePrice reports, stepped back from his more dour stance and allowed that housing may have hit bottom.
Nationwide new construction contracts (not closed sales, but signed contracts for purchase - subject to cancellations and other market forces) were up 9.6% , or 433,000 units per year. They were up - compared to last month’s numbers. But compared to July 2008, they were down 13.4%. That was the month Barron’s ran their well-reasoned analysis: “Bottom’s Up: This Real-Estate Rout May be Short-Lived.”http://online.barrons.com/article/SB121581623724947273.html

At any rate, the stock market gave a little yawn and then went on about its business.  Did I mention that new home sales account for about 7% of total sales volume? In addition, it is one of the most dramatically revised numbers that Commerce releases.
To get a large sense of scale, we can go back to July of 2005, when annual closed sales, not just contracts, came in at 1,370,000 units per year. A drop of 68% from there and 2005 wasn't as good as 2004!
Seattle tends to lag the rest of the country in slowdowns and in pickups. July new construction sales were down in King County from the same time last year – 526 units compared to 636 last year. The median price of listed new homes ($495,000) was $60,000 less than last year. The number of closed new homes was also lower: 280 vs 315. Median price of sold homes was $422,475 this July vs. $435,000 last July.
We can see that some of the builders’ subsidized interest rates, the first-time home buyers’10% tax credit (up to $8,000), the huge infusions of money used to keep mortgage rates low, not to mention declining home prices, are having a definite effect on the housing market. Yet it seems premature to be still feeling around for bottoms. Even though this follows the olde timey summer ritual, when the best half-year of buying and selling hits a seasonal crescendo in July, just in time for everyone to go on vacation or get ready for the relatives. Happens year in and year out, giving us plenty of high-octane hope for the more serious autumn season. Until then, enjoy the last golden rays here in sunny Seattle.