Record New Home Inventory, Prices Tumble

From the Commerce Department. "Sales of new one-family houses in December 2005 were at a seasonally adjusted annual rate of 1,269,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.9 percent (±11.8%)* above the revised November rate of 1,233,000 and is 1.8 percent (±17.1%)* above the December 2004 estimate of 1,247,000." "The median sales price of new houses sold in December 2005 was $221,800; the average sales price was $272,900. The seasonally adjusted estimate of new houses for sale at the end of December was 516,000. This represents a supply of 4.9 months at the current sales rate. An estimated 1,282,000 new homes were sold in 2005. This is 6.6 percent (±5.4%) above the 2004 figure of 1,203,000." Not mentioned is the rising inventory for sale. A new record, at 516,000, which is 12.6% higher than November 2005 and 22% higher than the same month last year. Also from the commerce Dept. "The economy grew at only a 1.1 percent annual rate in the fourth quarter of last year, the slowest pace in three years. Spending on residential projects also rose at a 3.5 percent pace in the fourth quarter. That was down from a 7.3 percent pace in the prior quarter and an additional sign that the housing boom is losing some of its steam." From the US Census Bureau: U.S. Median Sales Price Jan 2005 $223,100 Feb 2005 $237,300 Mar 2005 $229,300 Apr 2005 $236,300 May 2005 $228,300 Jun 2005 $226,100 Jul 2005 $229,200 Aug 2005 $240,100 Sep 2005 $240,400 Oct 2005 $237,500 Nov 2005 $226,800 Dec 2005 $221,800 Posted by a reader: U.S. Average Sales Price Dec '04 $284,300 Aug $295,000 Sep $299,600 Oct $291,400 Nov $286,000 Dec '05 $272,900 From Annette Haddad at the LA Times. "New home construction in California fell last year for the first time in 10 years and could drop more sharply this year. The California Building Industry Assn. said housing production could drop by as much as 11% this year, potentially bad news for a California economy that has depended on construction as its leading job creator." "A slowdown could mean no increase or even a decline in construction jobs this year, economists said. 'Builders will be building fewer homes so they won't need to keep the same number of people on the payroll,' said economist Esmael Adibi of Chapman University." "He predicted that employment growth in California would slow this year to 1.1% from 1.6% in 2005, largely because of the ripple effects of the slowing housing market. Some regions, particularly the Inland Empire, where most of the state's new-home construction has been in recent years, could see an even bigger decline in employment growth." "Calabasas-based builder Ryland Group Inc. reported this week that its new-home orders were down 34% in California and the West last year. Dallas-based Centex Corp. held a 12-hour 'sale' Saturday at many of its new communities around the state, offering a select number of houses for as much as $100,000 off." "Multifamily permits fell 15% from last year, to 52,338. The fall was led by a steep decline in the Inland Empire, where starts fell 45%, and in Los Angeles County, which experienced a 10% decrease." "Back in 1995, the last time construction declined, the slowdown coincided with a housing market downturn that was caused in part by overbuilding of new homes. From 1992 to 1996, fewer than 100,000 homes a year went up across the state. Now, fearful of a repeat, builders are trying to line up buyers before laying foundations. Still, 2005 was the second time since 1989 that California's housing production exceeded 200,000 units."