New home sales came in at a seasonably adjusted pace of 526,000, continuing their fall from an all time peak of 1,389,000 in July of 2005. The median sale price for new homes fell to $227,600 in March, continuing its decline from a record level of $262,600 just last year in March of 2007. That makes for a 13% decline - so far. At the current sales rate, the 468,000 new homes currently for sale works out to an 11-month inventory. The all-time high of 11.6 months was reached back in April 1980.The bad news? We're clearly not seeing any sign of a bottom in the new home market. Worst of all, despite dramatically falling sales and prices, inventory continues to move higher. For this overhang to be worked down, we'll need to see fewer new builds and lower prices.
The good news? It's still early, but sales and prices are headed in the right direction to ultimately clean out the inventory glut. Lower housing starts will ultimately help on the supply side and lower prices will help with demand. One of the wild cards with the existing home sales inventory data is how many properties are not being listed by homeowners who would like to move but aren't even bothering to list their property due to the poor housing market.
This housing problem will be with us longer than most expect.