The Census Bureau and the Department of Housing and Urban Development today released New Residential Home Sales survey data for March 2010.
The Census Bureau collects new home sales based upon the following definition: "A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit." The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction.
From the release...
Sales of new single-family houses in March 2010 were at a seasonally adjusted annual rate of 411,000.
We are now bouncing along right above record low levels. After an extremely slow winter, new home sales are back to the level seen when the first tax credit expired in November.
First of all, this was expected as the homebuyer tax credit is expiring at the end of the month. In order to qualify, homebuyers must sign a sales contract by April 30.
Second, I know this data seems to be great, but I cannot emphasize this enough though: we are coming off of record low month of activity. Even a modest uptick in New Home Sales will appear monumental on a relative basis. For example, if sales rose from 1 to 2 in March, the rise would be 100%. I
In times when housing supply/demand is in better balance, new home sales usually lead existing home sales regarding changes in the residential sales market by a month or two. In the current environment, I think the opposite will occur. Existing Home Sales will be a forward looking indicator for New Home Sales. The faster existing inventory is taken down, the sooner builders are likely to break ground on new projects.
If you missed it, I discussed the idea that "shadow buyers" are lurking on the sidelines as well how many mortgage applications the MBA may or may not be missing in their weekly survey.
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