Tuesday, May 24, 2011

Home-Sales Disaster

The Lehmann Letter (SM)

This morning's Bureau of the Census release of April's new-home sales data (http://www.census.gov/const/newressales.pdf) began with this paragraph:

“Sales of new one-family houses in April 2011 were at a seasonally adjusted annual rate of 323,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.3 percent (±16.6%)* above the revised March rate of 301,000, but is 23.1 percent (±9.7%) below the April 2010 estimate of 420,000.”

It appears that building activity improved in the latest month but is down from a year ago. But that obscures the big picture. The chart shows that new-home sales have fluctuated under 400,000 in most months for the past several years. Residential construction is mired in a deep slump.

New Home Sales

(Click on chart to enlarge.)

Recessions shaded

New-home sales must double before we declare that the slump is over. And that still won’t provide robust conditions.

We have a problem.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2011 Michael B. Lehmann

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