Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago

Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago by Wolf Richter – Wolf Street

Hot air is hissing out of this market.

Sales of new single-family houses in September plunged 18% from September a year ago, not-seasonally adjusted, to just 41,000 new single-family houses, according to estimates that the Census Bureau and the Department of Housing and Urban Development jointly reported this morning.

In terms of the seasonally adjusted annual rate of sales, which projects what sales for an entire 12-month period would be based on the sales in September: It plunged 13% from September last year to an annual rate of 553,000 houses. Single-family house sales account for about 10% of total home sales. This data is volatile and is subject to big adjustments, but after a while, the trends are starting to be unignorable:

But the number of new unsold single-family houses on the market keeps surging and in September jumped 16% from a year ago, to 331,000 houses (not seasonally adjusted), the highest number since January 2009, during the middle of the housing bust.

This supply of unsold new single-family houses on the market, at the rate of sales in September, represents 8.0 months’ supply, the highest since February 2011, and up 40% from September a year ago.

So, is it time to cut prices to move the unsold inventory languishing on the market? You bet.

In September the median sale price dropped, very embarrassingly, 3.5% from September last year, to $320,000. The median price is now down 6.8% from the glory days at the peak last November:

Homebuilders are pros. There are no emotions involved. They do this for a living. They have all sorts of data at their fingertips. They know how the market works, and where the market is headed, and they cannot sit on their unsold inventories for long, and they will sell what they have built, one way or the other, and if they have to cut prices and offer incentives, so be it.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.