New Home Sales Report - Housing Data for September 2008

As reported by Bloomberg - "U.S. New-Home Sales Unexpectedly Rise as Prices Drop":

What was expected:

Economists had forecast new home sales would drop to a 450,000 annual pace from an originally reported 460,000 rate the prior month, according to the median estimate in a Bloomberg survey of 59 economists. Forecasts ranged from 400,000 to 501,000.

The good news (sort of):

Sales of new houses in the U.S. unexpectedly rose in September from a 17-year low, propelled by a drop in prices ahead of the latest turmoil in financial markets.

Purchases increased 2.7 percent to an annual rate of 464,000 from 452,000 the prior month that was less than previously estimated, the Commerce Department said today in Washington. The median sales price decreased to a four-year low.

The bad news:

The median price of a new home decreased 9.1 percent from a year earlier to $218,400, the lowest since September 2004.

Sales were down 33 percent from September 2007, the Commerce report showed.

More importantly, in our opinion, were the numbers reported in the housing starts and building permits report released on October 17th since both numbers were down significantly and will ultimately play a future roll in helping to reduce these huge inventory levels.

Nonetheless, the new home sales numbers released today do provide for a small bright spot amongst all of the housing doom and gloom. In looking back at the recent housing numbers released in October, providing insight to September's housing data, we believe that there are really two plausible conclusions for some of the better than expected numbers:

Yes, despite the economic meltdown, there is some stabilization that is slowly beginning to occur and we also believe that there was a rush to get purchases pushed through in September in consideration of the elimination of the FHA down payment assistance program, beginning on October 1, 2008.

Perhaps a different story will be told with the holiday season shortly upon us!