Wednesday, April 26, 2006

New Residential Sales

Census released the New Residential Sales data for March 2006. The report can be found here:

NEW RESIDENTIAL SALES IN MARCH 2006

Sales of new one-family houses in March 2006 were at a seasonally adjusted annual rate of 1,213,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 13.8 percent (±14.9%)* above the revised February rate of 1,066,000, but is 7.2 percent (±12.8%)* below the March 2005 estimate of 1,307,000.

The median sales price of new houses sold in March 2006 was $224,200; the average sales price was $279,100. The seasonally adjusted estimate of new houses for sale at the end of March was 555,000. This represents a supply of 5.5 months at the current sales rate.


New Home Sales were down 7.2% Nationwide with the Northeast leading the decline at -15.2%.

Median sales price was down 6.5% in March versus February. The March median sales price ($224,200) is down 8.1% from the peak of $243,900 set in October. Median prices are down 2.2% on a year over year basis. Inventory was up 2.7% in March.

Caveat Emptor!
Grim

29 Comments:

Anonymous Anonymous said...

Given that the median price has fallen indicating larger no of below median homes being sold it is indicative of people starting to get good deals ?

4/26/2006 09:43:00 AM  
Anonymous Anonymous said...

I wouldn't quite say "good deal"

4/26/2006 09:53:00 AM  
Anonymous Anonymous said...

Not much mention of this in the media:


Bloomberg News
April 25, 2006

Home foreclosures increase 72%

Mortgages entering foreclosure jumped 72 percent during the first quarter from a year earlier, as higher interest rates increased monthly payments and strained the budgets of homeowners with adjustable-rate loans.

Lenders began foreclosing on 323,102 mortgages, a ratio of one in 358 U.S. households, according to a report issued Monday by RealtyTrac Inc. Banks typically start foreclosing on mortgages after payments are 90 days late.

"When you couple the higher bills that people with adjustable loans saw with the higher-than-expected energy costs, you see a lot of homeowners stretched beyond the point where they could make their payments," said Rick Sharga, a RealtyTrac vice president.

Homeowners who would otherwise sell their houses to pay off their loans face a weaker market, he said.

Sales of existing homes fell to 6.71 million at an annualized rate in the first quarter from 6.94 million in the last three months of 2005, according to Fannie Mae, the nation's largest mortgage buyer.


http://www.chicagotribune.com/business/chi-0604250181apr25,1,3999687.story?coll=chi-business-hed
(triple-click long links to select)

4/26/2006 10:17:00 AM  
Blogger grim said...

Be careful with reading too much into the median price falling. It simply indicates that the median price fell. Especially so, since we're looking at nationwide data.

grim

4/26/2006 10:29:00 AM  
Anonymous Anonymous said...

Hi Grim and the other posters here,

Once again thank you for all your information. I have been checking this site daily for the last 6 months.

Here is my situation:

married for 1 year no kids, but plan on starting next year.
we have about 120k in savings
wife and I make about 145k Per year
currently renting at a monthly expense of 1000 plus utils
our price raneg is upto 500k

My questions is:

Should we wait it out until end of 2006/early 2007 or buy now? It seems houses that are priced right are moving.

Also, pricing has def changed since last spring. I have noticed more and more price reductions. I just feel I waited this long( tracking in and out of the market since 2003) I could wait 6 more months and possible pick something up during the downside.

IMHO i think prices are due for a correction. What do you guys think?

4/26/2006 10:42:00 AM  
Anonymous Anonymous said...

Unrealtor,

also... seems like there's no mention of the year-over-year drop of 7.2% in sales... all of these mainstream media outlets just keep on pumping up that 13% stat... over and over again... amazing.

4/26/2006 10:49:00 AM  
Blogger grim said...

If I were in your shoes, and this is only my personal opinion, I'd wait.

You've got a great income and a great amount of savings for what I can assume is a young couple (you don't mention your age).

Your rent? At $1,000 a month you aren't "wasting" any money at all. In fact, you are likely saving a significant amount of money.

With your income you should be able to save a significant amount of money in the next year. Set a savings goal for yourselves even more aggressive than you have. Try to save an additional 50k by this time next year.

grim

4/26/2006 10:56:00 AM  
Anonymous Anonymous said...

thanks Grim.

My wife is 29 and I am 31. WE hope to save as much as we can this year.

My wife just finsihed up her masters and started her first job few weeks back. This will be a great help towards our savings.

Kash

4/26/2006 11:12:00 AM  
Blogger grim said...

The media was not reporting the information incorrectly, they were simply citing the change from last month.

I was citing the year over year change.

grim

4/26/2006 11:14:00 AM  
Anonymous Anonymous said...

My uncle and I were having a discussion on new grads and there ability to afford housing etc in the upcoming years.

With the cost of education and living expenses exploding, I think the new grads will have a very tough time. I see alot more young adults moving back with their parents due to affordibility and student loan pressures.

-Kash

Kash

4/26/2006 11:17:00 AM  
Anonymous Anonymous said...

Kash, I agree. Add that to the "I want it now" mentality and we will have an entire generation with more debt than they know what to do with.

4/26/2006 11:27:00 AM  
Anonymous Anonymous said...

RE: "should we buy now?"

No.

4/26/2006 11:29:00 AM  
Anonymous Anonymous said...

At $1,000 a month you aren't "wasting" any money at all. In fact, you are likely saving a significant amount of money.


Indeed. "Wasting money" is buying a house for $400,000 and it being worth $300,000 a year later.

Lose a job, get seriously injured, and you're forced to sell at a $100,000 LOSS.

4/26/2006 11:33:00 AM  
Anonymous Anonymous said...

1 Year Married Guy!

You and I are in a same situation. I got married last Oct, and we've been looking to purchase a home for the past two months or so. I've placed a bid on a houses already, all four separate bids have been rejected, because they were usually under by a lot. Good news is that one actually contacted my agent to see if I was still interested in their house.

Now I am smiling as prices are starting to fall. I think we need to just stick it out just little longer.

4/26/2006 12:16:00 PM  
Anonymous Anonymous said...

1 Year Wed Guy...

Also on 2 out of 4 bids, we were the highest bids... but the seller was upset that it wasn't close to their asking price and they didn't want to budge and we didn't want to budge...

This is the classic example of sellers still wanting the going rate of 2004 or 2005, but it's not the case and you will see this in many situations for the next 6 months or so...

Now I just need to keep convincing my wife to hold off on purchasing a new home... I am even trying to convince her to quit her job that she hates and look to do something more fulfilling with her career... =)

4/26/2006 12:24:00 PM  
Anonymous Anonymous said...

I will be married this time next year. My fiancee and I have about 60k saved between the two of us. Our combined income is only about 90k per year, but we don't have any debt (no car payments, student loans, cc debt, etc). I don't know what we are going to do next year...hopefully the market will be in our favor :x:

4/26/2006 12:29:00 PM  
Anonymous Anonymous said...

I think by august and sept we will have a pretty clear picture re: the RE market direction in NJ.

For now I will continue to wait. I just hate the spurts my wife and I get from time to time to buy a house. Hopefully we are making the right decision.

-1 Year Married Guy

4/26/2006 12:38:00 PM  
Anonymous Anonymous said...

What;s priced right mean?

Oh it's the same price as summer 2005, but only 100% igher than 2000. Does that sound priced right!!!

4/26/2006 12:47:00 PM  
Anonymous Anonymous said...

Hey, don't blame the media for the month over month. Well, don't complete blame them. They take the numbers that are generated and simply put them out on the newswires then it gets picked up all over the world. You'll have a delayed complete analysis coming in the days, weeks, and months ahead.

Just keep checking all the blogs, they are doing nearly real-time analysis of the numbers and providing a better picture than the mainstream media does on the initial issuance to the public.

4/26/2006 12:54:00 PM  
Anonymous Anonymous said...

check out this article. Very GRIM picture in florida housing.

http://www.sun-sentinel.com/news/local/southflorida/sfl-zhomesbr25apr26,0,3917618.story?coll=sfla-home-headlines

-K

4/26/2006 01:20:00 PM  
Anonymous Anonymous said...

I am glad to see finally someone posted a situation in house buying.

This is not a slash on Kash or anyone in the same situation. I personally feel that Kash's thinking has a lot to do with the run up of this bubble.

Kash has $125K in the bank and yearly income of $145K. His range is up to $500K.

Grim and everyone advise not to buy in the current market which should be the universal advice in this forum. However, beside this is not the right time to buy, is a $500K house really within the reach of Kash's position?

20% of $500K is $100K. So, there is $25K left in saving. A few more $K goes when you move into a house. That is the savings part.

How about the mortgage? A $400K mortgage at 6% for 30 yrs is $2400. Now plus property tax (I will use my house $7500) and utilities (I will use my bills $4800/yr). That is a total of over $3400 a month.

Does everyone think this is affordable? Or am I just too conservative?

PMa

4/26/2006 01:49:00 PM  
Anonymous Anonymous said...

PMA,

I am in a position similar to Kash and I agree with you that this is not really "affordable." That's why I;m waiting too for next year.

I get 125000/12/3=3472 which is right on the rule of thumb, but maybe I feel more conservative too, esp when it seems there is a chance of layoffs in many industries.

4/26/2006 02:56:00 PM  
Anonymous Anonymous said...

FYI... the general rule for buying a home is... your total income x 2.8... for example, if your total household income is $100,000... your mortage, at the most, should be $280,000.

Also... if you actually did look at the 2 page document from the commerce department, you would clearly see that the first 3 sentences did state year-over-year facts correctly... the media decided to go with month-to-month stats...

4/26/2006 02:57:00 PM  
Anonymous Anonymous said...

Plus PMA, I forgot to add that your tax number may be low for many areas of NNJ, esp with the current state & local budget woes which so no sign of abating which only adds to the monthly payment...

4/26/2006 02:59:00 PM  
Anonymous Anonymous said...

We are in a similar situation as Kash, 160k savings, no other debt and 155-160k salary. We were going to buy a 680k house because we loved it a lot and it's a far better buy comparing to similarly priced homes.

Eventually we decided to hold off because we think we will be left with less money each month than we are comfortable with.

Is the same house going to be worth 80k-100k less next year? I doubt it seriously. That being said, if you look at how many potential buyers out there like us that are holding off the purchase because of today's market, it's not hard to figure out the market will not get hit badly any time soon. We will buy as soon as we see another good buy in a lower price range.

4/26/2006 03:09:00 PM  
Anonymous Anonymous said...

Skeptic... according to my calculator a fixed 30yr. mortgage for $406,000 @ 6.5% = $2,639 per month... and that doesn't even include taxes... i don't know where you're getting your $2,053... are you using calculations for an interest only mortgage?

4/26/2006 03:37:00 PM  
Anonymous Anonymous said...

Skeptic,

Oh, i see... sorry... i got numbers mixed up... my bad.... also... btw... a mortage for $280,000 @ 6.5% = $1,820... without taxes included.

Anon 4:37

4/26/2006 03:41:00 PM  
Anonymous Anonymous said...

I have been a fan of the site and this is my first post. Grim, thanks for all your time and effort to put out such valuable information. Same as recently married...two years, baby on the way, 190k saved, mortgage of 175k in a great town by the beach...no other debt. We just can't believe the prices but are optimistic with all the reductions...just trying to keep my wife relaxed and optimistic about our future choices.....Tons of great help from all you out there...Thank you

4/26/2006 06:32:00 PM  
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5/18/2006 05:34:00 PM  

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