Monday , June 17 2024
Continued weakness in the housing sector suggests economy still weak.

New Residential Home Sales Show Little Improvement

Sales of new single-family houses were down to 328,000 units in March, according to numbers released by Census Bureau and the Department of Housing and Urban Development. This time last year, the March sales figures were approximately 305,000.

For historical comparison, the graph below shows the magnitude of the housing sector crash: housing activity is at a level lower than it was during the throes of the 1980s recession, when sales dropped below the 400,000 unit mark.

The median time a new house takes to sell is at 7.8 month, but half of the new houses on the market will take longer to sell. Historically, this is comparable to the 1980s and 1990s post-recession markets and still well above the historical median of five months.

Median sales price for new homes suggests that half of the houses sold are sold for less than $240,000.

A look at the seasonally adjusted Case-Shilller 20 city composite price index shows the appreciation of the housing prices versus the year 2000. At the height of the housing boom, in 2006, housing prices had increased to more than 200% versus the prices in the year 2000, meaning a 100% return. For example, if you bought a house in 2000 for $200,000, by 2006 you could sell that house for $400,000. Buy the end of the 2008 recession, however, prices fell by 60% to 140%; that same house would only net $240,000 on the market. Today prices are below that $240,000 mark, indicating a potential weakens in the housing sector.

About A. Jurek

A Jurek is a Blogcritics contributor.

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