by Calculated Risk on 11/25/2009 10:00:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 430 thousand. This is an increase from the revised rate of 405 thousand in September (revised from 402 thousand).

Click on graph for larger image in new window.

The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).

Note the Red columns for 2009. In October 2009, 35 thousand new homes were sold (NSA); the record low was 29 thousand in October 1981; the record high for October was 105 thousand in 2005. This is the 6th lowest sales for October since the Census Bureau started tracking sales in 1963.

Sales in October 2009 were above October 2008 (32 thousand). This is the first year over same month increase since October 2005.

The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales fell off a cliff, but are now 31% above the low in January.

Sales of new one-family houses in October 2009 were at a seasonally adjusted annual rate of 430,000 ... This is 6.2 percent (±17.6%) above the revised September rate of 405,000 and is 5.1 percent (±14.9%) above the October 2008 estimate of 409,000.

And another long term graph - this one for New Home Months of Supply.

There were 6.7 months of supply in October - significantly below the all time record of 12.4 months of supply set in January.

The seasonally adjusted estimate of new houses for sale at the end of October was 239,000. This represents a supply of 6.7 months at the current sales rate.

The final graph shows new home inventory.

Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels.

Months-of-supply and inventory have both peaked for this cycle, and sales have probably bottomed too. New home sales are far more important for the economy than existing home sales, and new home sales will remain under pressure until the overhang of existing housing inventory declines much further.

I'll have more later ...