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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Saturday, February 02, 2008

December National Housing Statistics

Yep, it's that time of month, the numbers have come out little by little for the past 12 days or so so, lets round em up.

The Quick Summary
Essentially, the December numbers continue a trend seen for many months now; the largest declines in production yet, with some of the highest inventories and lowest demand on record.

Supply Factors: Too Much Inventory
New Home Inventories, (PDF): With current demand, inventories now stand at a 9.6 months supply. The highest level of the year, 60% above the so called normal.

Permits, Starts, Completions, (PDF): Compared with last December; Permits down 34.4%, Housing Starts down 38.2.%, and Completions down 31%.

Perspective on New Homes From Other Commentators:
The Wall Street Journal pointed out that these figures represented a 14.2% decline from an already bleak November, 2007 level, and was the slowest pace of construction since May, 1991.

Money CNN chimed in as follows:
For the year, housing starts fell 25 percent to 1.35 million. That decline represents the biggest drop since the recession year of 1980 and the third largest drop since the Census Bureau started tracking this activity in 1959.
Paper Economy examines the US by region, in its normally thorough manner. Once again, no area of the country escaped. In the South, single family permits were down by more than the national average at 43.9% compared to December, 2006.

Housing Intelligence points out, in an exceedingly simple supply/demand framework:
This is a reflection of builders pulling back hard on new production to get better aligned with a significant decline in demand.
We have written for months along those same lines. Builders have throttled back for more months than we can recall by 20-25% or more, yet inventories have still risen. It is a trend that will contribute to equilibrium at some point, but not without requisite decreases in prices, and stability in mortgage markets.

Existing Home Supply, (PDF): The year ended with a 9.6 months' supply level, which is 45.5% more inventory than one year ago, but is down from the 2007 high of 10.7 months' supply, and down 7.4% from November, 2007. Calculated Risk puts added perspective here:
The typical pattern is for inventory to decline about 13% in December, so this decline was less than normal. This is the highest December inventory level in history.
Demand Factors: No Sales, Falling Prices
New Residential Sales, (PDF): The numbers speak for themselves, 40.7% less than one year ago.
Money CNN informs us that this is the largest drop since the Census Department began keeping records in 1963. The year 1980 holds second place at a mere 23% decline. Median prices fell by a rate not seen since 1970.

Paper Economy does its usual regional analysis. The South was spared slightly, with new home sales declining by 36.3%, a bit better than the nation as a whole.

Existing Home Sales, (PDF): We will leave perspective here to more illustrious observers:

Interest Rate Roundup is succinct:
There wasn't much holiday joy for the real estate market in December. Sales slumped to a fresh cycle low, while prices dropped by the largest margin yet.
Money CNN shows us just which records were set in this sub part of the market, while Paper Economy shows us the magnitude on a region by region basis. In this case the South fared slightly better.

What Will Stop the Slide?
In the most basic terms possible these factors would work well; 1) A 40% decline in the number of houses for sale, 2) Brought on by less building and lower prices, 3) Stability in credit/mortgage markets.

Of interest to all would be ideas as to how low on those prices. The big news of the past 10 days on that front was a study by Merril-Lynch making the case for 25%-30% reductions over the next three years.

Double digit declines in price are not really a new idea. When we did our August roundup, we linked to this article at Money CNN which spoke about such things.

Stay Tuned,

Thanks for stopping by,
Black Bear Realty Website
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