by Calculated Risk on 10/24/2014 03:30:00 PM

From housing economist Tom Lawler:

Census “guesstimated” that new SF home sales ran at a seasonally adjusted annual rate of 467,000 in September, up 0.2% from August’s downwardly-revised (by 7.5% to 466,000) pace. Sales estimates for June and July were also revised downward (by 2.4% and 5.4%, respectively). Not surprisingly (see LEHC, 9/24/2014), the biggest downward revision in sales for August was in the West region, where sales were revised downward by almost 20%.

Census also estimated that the inventory of new SF homes for sale at the end of September was 207,000 on a seasonally adjusted basis, up 1.5% from August’s upwardly revised (to 204,000 from 203,000) level and up 13.1% from a year ago. Census estimated that the median new SF home sales price last month was $259,000, down 4% from last September.

Census Estimates of New SF Home Sales in August (SAAR)
	Preliminary	First Revision	% Difference
US	504,000	466,000	-7.5%
Northeast	31,000	30,000	-3.2%
Midwest	58,000	57,000	-1.7%
South	262,000	256,000	-2.3%
West	153,000	123,000	-19.6%

Here are Census’ estimates of new SF home sales for the first nine months of 2014 compared to the first nine months of 2013 (not seasonally adjusted).

Census Estimates of New SF Home Sales, Jan - Sep (NSA)
	2014	2013	% Change*
US	337,000	331,000	1.7%
Northeast	21,000	24,000	-12.5%
Midwest	47,000	47,000	-1.2%
South	187,000	175,000	6.8%
West	82,000	85,000	-3.2%
*Note: Census only shows home sales rounded to the nearest thousand, but % changes are reported based on unrounded estimates

New SF home sales so far this year have fallen well short of consensus industry expectations at the beginning of the year. A major reason appears to be weakness sales to first-time home buyers, partly because of tight credit, partly because of financial “issues” for many younger adults, but also partly because many builders have trouble meeting their high return targets for communities with smaller, lower-price homes that would normally be targeted for first-time buyers.

As an example, home builder Pulte noted this morning that given its return targets “most” of its current land development was going to communities focused on the move-up and active adult markets, as in many areas there is not enough “pricing power” in the first-time buyer market for the company to meet its return targets.