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New home sales data released this morning by the U.S. Commerce Department
showed a 2.7% increase in volume of sales from August to September.
Headlines screamed across the internet and the stock market jumped. Looking more
closely, readers found that nationally, sales in September were down 33%
compared with September 2007.
On the good news side, the inventory of unsold homes
fell a record 7.3% in September to 394,000, the lowest level in
four years. That’s good because we need to clear out inventory before building
can begin again, and before we regain any of the price loss experienced in this
downturn. In the past year, inventories have fallen 25.4%, the biggest
percentage drop since the government began tracking the data in 1963.
The median sales price for new homes fell to $218,400, down
9.1% in the past year. It's the lowest median sales price in four years. That’s
good news for the prospect of clearing out some inventory – if buyers can keep
their jobs. It’s not such good news for the builders or their lenders, who may
not make up what they put into these homes which have been sitting unsold for
quite a while. As Floyd Norris, the New York Times chief financial
correspondent, notes, new-home
sales volume in September were the lowest for any month since December 1991.
This is not good news for anybody.
The Commerce Department says it can take over 5 months to establish a trend
in sales, so don’t get really excited about the news of the August to September
gain. More importantly, note that this may not even be a gain.
Government statisticians have low confidence in the monthly report, which is
subject to large revisions and sampling and other statistical errors. In most
months, the Commerce Department isn't sure whether sales actually rose or fell.
The standard error in September, for instance, was plus or minus 12.1%. This is
3-4 times the margin of error found in the typical poll we read daily in the
Obama/McCain horse race.
The Flagstaff real estate market seems a little bit hotter this week -- just
judging by the traffic in our office and calls and emails to our team. What does
this mean? We'll look back in six months and tell you.
Meanwhile, if you need to buy or sell Flagstaff real estate, give us a call,
or start by visiting our website: Flagstaff real estate by
Team Heitland at RE/MAX Peak Properties. | 
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