Sales of U.S. new homes rose 2.7% from July to September on a median sales price not seen since September 2004, but fell 33% from September 2007 on overall lower demand.
“Builders are seeing the light,” Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview. “They are cutting prices more aggressively. They’re very nervous about all the foreclosures.”
Or in the case of San Francisco, the slowing of new home absorption (which shouldn’t catch any plugged-in readers by surprise).
∙ U.S. New-Home Sales Unexpectedly Rise as Prices Drop [Bloomberg]
∙ Price Cuts Of Up To 30% At Symphony Towers (750 Van Ness) [SocketSite]
A few interesting extracts from the Bloomberg article –
“The supply of homes at the current sales rate fell to 10.4 months’ worth from 11.4 months. A five to six months’ supply is often cited as signaling a stable market.
The increase in purchases was paced by a 23 percent surge in the West. Sales dropped 21 percent in the Northeast and 5.8 percent in the Midwest.
Home resales rose a more-than-forecast 5.5 percent in September to a 5.18 million pace, the highest level in a year, the National Association of Realtors said on Oct. 24. The gain was driven by sales of distressed properties, which comprised up to 40 percent of the total, the Realtors group said. The median price fell 9 percent.”
I’m not sure we have reached an absolute bottom, but it’s appears that when prices do fall to a certain point [which will vary from place to place] buyers do come off the sidelines and opt to buy. As with a piece Socketsite referenced last week, where sales volumes in places like Solano & Contra Costa almost doubled year over year, in an area where prices have fallen 35%+. The overall 23% rise in the west may suggest that there are other areas of California where the pent up demand is actually pulling the trigger as the plunging price points become appealing. There may be more bad news to come, but a one month reduction in outstanding supply [from 11.4 months to 10.4 months] is a step in the right direction … although still a way to go to get to a ‘stable’ market. Remember, the sooner the housing markets does stabilize, the sooner we will see something positive from the equity markets.
[Editor’s Note: Keep in mind the supply of listed inventory in San Francisco is up (around 17% YOY) while the pace of listed sales is down (around 30% YOY).]
I agree with the above article that this is probably NOT the absolute bottom. I do believe, however, that the worst has happened on the main street – high foreclosures, disappearing of ALL 5 investments banks….
There will be some residual impact on the home price, but another 30-40% drop that some predicted on SS is less likely.
And as alway, with RE and stock market, until it is 20% back up, no one would say that we hit the bottom.
Best traditional indicator of falling home prices is J-O-B-S.
What you’ve seen so far is just the sub prime resets causing their problems.
A recession, and the job losses which will follow, is going to pile on to that.
All the good news about the sales doesn’t apply for SF. SF is different(location-location-location), the same way its immune to dropping prices, it is immune to fast recovery…