by Calculated Risk on 11/26/2008 11:56:00 AM

Click on graph for larger image in new window.

First, here is a long term graph of new home sales and inventory from the Census Bureau.

Although home builders have sharply reduced housing starts - and are now starting fewer homes than they are selling (reducing inventory) - new home sales have fallen rapidly too. It has been a race to the bottom!

Also - New home sales in October might be at the lowest level since 1982, however adjusted for owner occupied units, the current year is the worst on record.

The following graph shows both annual new home sales (from the Census Bureau) and sales through October.

In 2008, sales through October (before revisions) have totaled 436 thousand. This is slightly ahead of the pace in 1991 (432 thousand sales through October).

However sales have slowed in the 2nd half of 2008, and it appears that annual sales will be below the 509 thousand in 1991. This would mean sales would be the lowest since 1982 (412 thousand).

Of course the U.S. population and the number of households were much lower in 1982. In 1982 there were 54.2 million owner occupied units in the U.S., in 1991 there were 61.0 million, and there are approximately 76 million today.

If we use a ratio of owner occupied units to compare periods, the low in 1982 was 412 thousand X (76/54.2) = 578 thousand units (based on the number of owner occupied units today).

The calculation for 1991 gives 634 thousand units (to compare to today).

By this measure, 2008 is the worst year for new home sales since the Census Bureau started tracking new home sales (starting in 1963).