New Home Sales continue their fall last month

The U.S. Census Bureau and the Department of Housing and Urban Development released the New Home Sales figures for February 2008 today.

Sales of new one-family houses in February 2008 were at a seasonally adjusted annual rate of 590,000 which is 1.8% below the January 2008 rate of 601,000 and is 29.8% below the February 2007 rate of 840,000.

There is currently 9.8 months supply of new homes. Months Supply is the number of months it would take to sell all the homes at the current sales pace if no new homes were added. Above 6 months supply puts pressure on home prices. The median home price rose to $244,100 from $225,600 posted last month, but is below February 2007’s median price of $250,800. Median home prices for new homes are very volatile as the chart on the right shows.

As mentioned in this post, although the situation is slowly improving, more new homes are still being built than are being sold.

The sales pace is also deteriorating at a faster pace. Since May 2007, Sales for the month compared to 2005 (highest rate in the last 7 years) and 2001 (lowest rate in last 7 years) has deteriorated every single month excepting October 2007 when it fell at a slightly slower rate than the previous month. March is typically the busiest month of the year for New Home Sales. It will be interesting to see how New Home Sales perform this month.

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