Sales are up 4.6%, prices down 4.3% in May, compared to April.
“The lower prices could be one of the things supporting the higher-than-expected new home sales numbers, said David Seiders, the chief economist for the NAHB, who admitted he was surprised when the report showed an increase in sales.
“The only reason you would think they were up [is] the aggressiveness of the builders’ sales techniques,” he said. “They’re using Realtors more, they’re using incentives more. In our January survey, 18 percent said they were doing some level of price cutting. In June, that was up to 41 percent. A year ago they had to do hardly anything to sell. They just had to whisper in the woods that they had a house and the buyers would come running.”
Phillip Neuhart, economist at Wachovia, said that the report Monday doesn’t change his view that housing is going through a significant slowdown. He said that the new home sales reading is inflated by the fact it is based on when a sales contract is signed, not when the sale is closed.
“Builders are reporting a high-number of cancellations, so these numbers are inflated,” said Neuhart. “We think the NAHB survey is the best indication of the home building market right now.”
From Ben’s blog, regarding the realtors association May numbers for inventory. Ben wrote:
“That’s a 5.5% increase over the last month, a 41% increase over the same month last year and a 51% increase in YOY months supply.”
Despite more choices, buyers are not biting. If this is not increased illiquidity, what is? I would be worried if I had to sell for job loss, move, divorce.
The housing market seems pretty illiquid right now.
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