Pending Home Sales For December, 2009 Rise Slightly

The National Association of Realtors® (NAR) released its Pending Home Sales Index for December 2009 on February 2, 2010. Pending sales rose slightly by 1.0% from the prior month. 

Lawrence Yun, NAR Chief Economist

NAR Chief Economist Lawrence Yun pointed out that the December figures represented the 5th highest monthly sales total in two years. Yun noted that  “While New-Home Sales will remain low due to a lack of construction, existing-home sales are projected to rise to about 5.6 million in 2010.” This is a projected 8.5% increase for 2010 over the 5.16 million existing-home sales reported for 2009. 

Yun also noted that one of the greatest benefits from rising sales will be firming home prices. “For several months now we’ve been seeing  stabilization in all of the home price measures as inventory is pulled down. As a result, the housing wealth for many middle-class families has begun to stabilize.” 

We pointed out in a previous Housing 101 post that we also think that the Case-Shiller Housing Price Index will begin to report year-over-year price increases starting with the January, 2010 report that will be released in March, 2010. The reason for our belief in the coming increases is that the sharp monthly price decreases reported at the end of 2008 will drop out of the annual calculations and be replaced with slowly rising monthly prices in early 2010. 

See the full report: http://www.realtor.org/research/research/phsdata

New Home Sales Fall For December 2009

New Home Sales Fall in December, 2009

The U. S. Census Bureau announced on January 27, 2010 that sales of new one-family homes  dropped another 7.6% in December 2009 from the previous month to 342,000 units. As usual, results were mixed regionally, with the Northeast up +42.9%, the West up +5.2%, the South down -7.3%, and the Midwest down -41.1%.

The inventory of homes for sale expressed in months of supply rose to an 8.1 month supply after rising the previous month to a 7.6 month supply. Paradoxically, the actual number of homes for sale fell by another 4,000 homes from 235,000 homes in November to 231,000 homes in December, which, incidentally is the lowest number of homes for sale since 1971. That was 39 years ago!

However, the inventory of homes is traditionally expressed in the number of months of supply, in which the number of homes available for sale divided by 1/12th of the Seasonally Adjusted Annual Rate (SAAR) of sales for the most recent month. This supply figure was at 11.2 months a year ago and peaked at 12.4 months in January 2009. Many real estate professionals consider 6-to-7 months of supply a “Normal” market.

So the inventory number was fair, but not as good as previous months.

The drop in sales is not surprising in that the First Time Home Buyer Tax Credit was originally to expire on November 30, 2009, and we anticipated that buyers would have run out of time to buy a home and still close by the end of November.

This theory would suggest that you would see sharply lower sales of lower-priced homes as first-time home buyers dropped out of the market because of the end of the original home buyer tax credit; whereas, move-up buyers would be unaffected.

However, similar to the November figures, this is not what seems to have happened. Sales fell 7.6%, and, yes, the percentage share of sales to buyers of homes under $200,000, the typical first-time home buyer price range, fell from the November level of 47%  of total sales to 43% in December.

The share of sales in the first move-up price range, $200,000 to $300,000, also lost share, falling 6 percentage points from 30% in November to 24% in December.

But the share of sales of homes above $300,000 gained the 11 points, rising from 23% in October to a 34% share in December.

So it appears that new home sales fell most strongly in the middle price and middle price ranges in December, with lower-priced homes also falling in total but with a smaller drop in share of total sales. And higher-priced homes above $300,000 not only increased in market share, but they also increased by +16.7%  in actual unit sales from 6,000 homes in November to 7,000 homes in December.

Even though the Tax Credit was extended and signed by President Obama on November 6, 2009, it should take several months before the next batch of home buyers can get themselves geared up to buy a home.

So we would have expected new home sales to fall in November,and December before rising again in January leading up to the next Tax Credit Cut Off on April, 30, 2010.

Let’s see what next month’s report brings.

See the full report: http://www.census.gov/const/newressales.pdf

Case-Shiller Housing Price Index For November 2009 Rises For Seventh Consecutive Month

Home Prices Rise At 7.2% Annual Rate Over Last Seven Months

Seasonally adjusted home prices in November of 2009 rose 0.2% from the prior month according to data released on January 26, 2010 by Standard and Poor’s in its 20-City Composite S&P/ Case-Shiller® Home Price Index.

There were monthly increases in November in 14 of the 20 markets tracked. Six of the markets fell.

Home prices have now risen seven months in a row for a total of +4.2% for the seven months, or an annual rate of increase over the period of +7.2%.

However, because of price declines in the previous 5 months, the price index still fell by 5.3% year-over-year during the 12 months ending in November 2009.

We predict that the 20-City Composite Index will achieve its first year-over-year increase since 2007 in the January 2010 report. We expect the increase to be in the range of +0.1% to +1.0%.

Our methodology is straightforward and simple minded. By examining the prior monthly decreases it is possible to predict when we will see year-over-year gains in this index: December 2008 was -2.6%, and January 2009 was -2.8%, which totals -5.4%. So by simple math, if prices for the next two months remained flat, we would see a +0.1% year-over-year increase in the 12-month period ending in January 2010 as the large prior-year decreases drop out of the calculation and are replaced with zeroes. And, if prices rise the same the next two months as they did in the last two, an increase of +0.5%, then the Year-over-year increase would be +0.6%.

The index tracks quality-adjusted actual resale home closing prices for thousands of existing single-family homes in 20 metropolitan areas. The index excludes condos, coops, and new construction.

By tracking price changes of specific, individual homes over time, the index attempts to eliminate the problem of unreliable  home price averages caused by the changing mix of homes sold in different time periods. (For example, in weak markets, a greater proportion of small, starter homes are typically sold, reducing average prices even though the prices of specific homes may be unchanged or even increased.)

The dramatic improvement in the S&P/Case-Shiller® Home Price Index provides more evidence that the housing market is continuing to heal from the worst decline in housing activity in decades.

Furthermore, it suggests that prospective homebuyers waiting for lower prices may be disappointed.

With 30-year fixed mortgage interest rates now near 5% and rising, and the supply of homes beginning to dwindle, delaying a home purchase may prove to be an unwise strategy.

See the full release: http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245205349706&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

December 2009 Existing Home Sales Fall More Than Expected

The National Association of Realtors (NAR) announced on January 25, 2010 that existing home sales in December 2009 fell -16. 7% from the previous month to an annual rate of 5.45 million, which was a larger decrease than was expected. However, Closings were still +15.0% above the December 2008 level of 4.74 million homes.

In thinking about existing home sales data, it is important to remember that the NAR home sales data actually represents home closings. Almost all the homes closing in December were actually sold, that is the purchase agreements were signed, in previous months, typically 6-to-8 weeks earlier. New sales contracts signed are picked up in the association’s Pending Home Sales Report.

Since the first-time home buyer tax credit was set to expire on November 30, 2009, we should anticipate existing home sales (Closings) to fall sharply after November, because home buyers can’t stop on a dime and then restart as soon as the credit is extended.

This is exactly what happened even though the Tax Credit was extended and signed by President Obama on November 6, 2009, because it takes a while for a buyer to gear up to purchase a home, and then another 6-to-8 weeks to work through the loan application, home appraisal, and closing procedures.

Especially notable in this report was the continuing decline in the inventory of homes for sale, which fell another -6.6% to 3.29 million homes, representing a 7.2 month supply of homes.  A supply under 7 months  is usually consistent with stabilization in prices.

Excessive inventories in prior months had been a major cause of falling home prices. But the average home price in December was $225,400, which was 3.6% higher than the year-earlier level. 

According to Vicki Cox Golder, NAR President, “There’s a shortage of lower priced homes for sale in much of the country, resulting in multiple bids in some areas.

As home prices firm, consumer confidence should rise, further enabling the economic recovery.

So this report was not completely unfavorable. There were a few silver linings.

Home Loan Purchase Applications Up 0.8% in MBA Survey For The Week Ending January 8, 2009

On January 13, 2009, the Mortgage Bankers Association (MBA) released its survey for the week ending January 8, 2010.

The average 30-year mortgage during the week ending January 8, 2010 was 5.13%, which was down 0.05% from the rate reported one week earlier. The average 15-year mortgage during the week ending January 8, 2010 was 4.45%, which fell 0.17% from the week earlier survey.

For the week ending January 8, 2010, seasonally adjusted refinance applications jumped 21.8%, and purchase  applications rose 0.8% from the prior week according to the survey. The four-week moving averages for purchase applications was down 3.2%, while refinance applications fell 8.0% over the period.

The refinance share of applications rose to 71.5% from 68.2%. Refinance applications tend to be highly sensitive to interest rate levels.

The recent report leaves purchase applications roughly flat over the most recent week, but still 24.9% lower than the same period last year. This is not surprising given that the First-Time Home Buyer Tax Credit was only extended on November 6, 2009, at which time it was also expanded to cover some previous home owners. Nonetheless, we were expecting a fairly sharp drop off in purchase applications because we had expected that it would take several months for new buyers to get in gear to move forward with their home purchase plans.

As we enter the spring buying period, we will likely see more home buyers stepping up to the plate.

Although the rates are about 0.4% higher than the lows of several weeks ago, these low rates still continue to be encouraging for home purchases going forward. However, the idea of potential home buyers postponing purchases while waiting for better rates seems to be a bad bet at this point.

With the Fed planning to stop mortgage purchase operations over the next several months, serious potential home buyers should be thinking about pulling the trigger very soon or risk missing the low rates entirely.

Follow the link to see the full release: http://www.mbaa.org/NewsandMedia/PressCenter/71558.htm

Home Purchase Loan Applications Tank Before Christmas, Then Rebound For January 1, 2010 Report

The Mortgage Bankers Association (MBA) today released its survey for the weeks ending December 25, 2009 and January 1, 2010. (There was no news release during the week of Christmas; so they released two weekly reports today.)

The average 30-year mortgage during the week ending December 25, 2009 was 5.08%, which was up 0.16% from the rate reported one week earlier. The average 15-year mortgage during the week ending December 25, 2009 was 4.57%, which increased 0.23%from the week earlier survey.

The average 30-year mortgage during the week ending January 1, 2010 was 5.18%, which was up 0.10% from the rate reported one week earlier. The average 15-year mortgage during the week ending January 1, 2010 was 4.62%, which increased 0.05%from the week earlier survey.

For the week ending December 25, 2009, seasonally adjusted refinance applications fell 30.5%, and purchase applications fell 4.0% from the prior week according to the survey.

For the week ending January 1, 2010, seasonally adjusted refinance applications fell 1.6%, and purchase  applications rose 3.6% from the prior week according to the survey. The four-week moving averages were not provided in the news release.

The refinance share of applications fell to 68.2%. It had been 75.9% prior to Christmas. Refinance applications tend to be highly sensitive to interest rate levels.

The recent report leaves purchase applications roughly flat over the holiday period, but still 28.2% lower than the same period last year. This is not surprising given that the First-Time Home Buyer Tax Credit was only extended on November 6, 2009, at which time it was also expanded to cover some previous home owners. Nonetheless, we were expecting a fairly sharp drop off in purchase applications because we had expected that it would take several months for new buyers to get in gear to move forward with their home purchase plans.

After the holidays we will likely see more home buyers stepping up to the plate.

Although the rates are about 0.5% higher than the lows of several weeks ago, these low rates still continue to be encouraging for home purchases going forward. However, the idea of potential home buyers postponing purchases while waiting for better rates seems to be a bad bet at this point.

If they haven’t already made their move, any serious potential home buyer should be thinking about pulling the trigger very soon or risk missing the low rates entirely.

Follow the link to see the full release:

http://www.mbaa.org/NewsandMedia/PressCenter/71462.htm

Pending Home Sales For November 2009 Plunge 16%, Worse Than Expected

The National Association of Realtors® (NAR) released its Pending Home Sales Index for November 2009 today. Pending sales fell 16.0% from the prior month.

The index had increased each of the previous 9 months, and was expected to fall in November due to the originally scheduled end of the First-Time Home Buyer Tax Credit. However, the decline was larger than most economists had expected. Nonetheless, the index is still 15.5% higher than in November 2008.  

Economists had been expecting a decline in sales as the November 30th end of the Home Buyer Tax Credit approached, because buyers would not have enough time to buy and still close by November 30th. The Home Buyer Tax Credit has since been extended and expanded. President Obama signed the extension on November 6, 2009.

 

 NAR Chief Economist Lawrence Yun pointed out that home closings still could decline in coming months: “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit.”  He added that “We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”

Actually, the decline in Pending Home Sales for November is not that far off the previously announced monthly decline of 11.3% in New Home Sales for November.

However, the pattern of activity was different. New Home sales by geographical area were: Northeast, down 3.3% (Pending Home sales were down 25.7%.); Midwest, up 21.4% (Pending Home sales were down 25.7%.); South, down 21.1% (Pending Home sales were down 15.0%.); West, down 9.2% (Pending Home sales were down 2.7%.).

Pending Home Sales were down the most in the Northeast and the Midwest and the least in the West.

New Home Sales were down most in the South, down the least in the Northeast, and were even up in  the Midwest.

We have no idea why existing homes and new homes should sell at such different rates in the various geographic areas. Anybody have a guess?

In a earlier post in Housing 101, we theorized that there seems to be some constraint developing on New Home Sales due to the continually falling inventories of homes in the most popular lower price ranges. (In other words, there aren’t enough homes available for sale to support a higher rate of sales.)

We think that what will happen next is that, as the price range of existing homes sold continues to creep up, existing homeowners who sell their homes will be freed up to buy the higher-priced new homes that are still sitting in inventory. Sales of lower-priced new homes will slow due to a shortage of available inventory, and sales of higher-priced new homes will rise, sharply skewing up the increase in average new home sales prices over the next several quarters.

The number of new homes sold will have roughly flat month-over-month comparisons during this period. However, the year-over-year comparisons should be robust because of the very low sales rate during the first few quarters of 2009.

We pointed out in a previous Housing 101 post that we also think that the Case-Shiller Housing Price Index will begin to report year-over-year price increases starting with the January, 2010 report that will be released in March, 2010. The reason for the coming increases is that the sharp monthly price decreases reported at the end of 2008 will drop out of the annual calculations and be replaced with slowly rising monthly prices in early 2010.

See the full report: http://www.realtor.org/press_room/news_releases/2010/01/pending_surge

Case-Shiller Index Up 6th Consecutive Month; Increasing At 8.0% Annual Rate Over Last Six Months; First Annual Increase Since 2007 Predicted For January Report

Home Prices Rise At 8.0% Annual Rate Over Last Six Months

U. S. Home prices rose for the sixth consecutive month in October according to a report released on December 29, 2009 By S&P.  

Seasonally adjusted home prices in October of 2009 rose 0.4% from the prior month according to data released by Standard and Poor’s in its 20-City Composite S&P/ Case-Shiller® Home Price Index.

Home prices have now risen six months in a row for a total of +4.0% for the six months, or an annual rate of increase over the period of +8.0%.

There were monthly increases in October in 11 of the 20 markets tracked. One market was unchanged, and 8 fell.

However, because of price declines in the previous 6 months, the price index still fell by 7.3% year-over-year during the 12 months ending in October 2009.

We predict that the 20-City Composite Index will achieve its first year-over-year increase since 2007 in the January 2010 report. We expect the increase to be in the range of +0.5% to +2.0%.

Our methodology is straightforward and simple minded. By examining the prior monthly decreases it is possible to predict when we will see year-over-year gains in this index: November 2008 was -2.2%, December 2008 was -2.6%, and January 2009 was -2.8%, which totals -7.6%. So by simple math, if prices for the next three months remained flat, we would see a 0.3% year-over-year increase in the 12-month period ending in January 2010 as the prior-year decreases drop out of the calculation and are replaced with zeroes. And, if prices rise the same the next three months as they did in the last three, an increase of +1.6%, then the Year-over-year increase would be 1.9%.

The index tracks quality-adjusted actual resale home closing prices for thousands of existing single-family homes in 20 metropolitan areas. The index excludes condos, coops, and new construction.

By tracking price changes of specific, individual homes over time, the index attempts to eliminate the problem of unreliable  home price averages caused by the changing mix of homes sold in different time periods. (For example, in weak markets, a greater proportion of small, starter homes are typically sold, reducing average prices even though the prices of specific homes may be unchanged or even increased.)

The dramatic improvement in the S&P/Case-Shiller® Home Price Index provides more evidence that the housing market is continuing to heal from the worst decline in housing activity in decades.

Furthermore, it suggests that prospective homebuyers waiting for lower prices may be disappointed.

With 30-year fixed mortgage interest rates now near 5% and rising, and the supply of homes beginning to dwindle, delaying a home purchase may prove to be an unwise strategy.

See the full release: 

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245200590760&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

Why Did New Home Sales For November, 2009 Fall? Look To The South And Falling New Home Inventories For Answers; Predictions For The Future

On December 23, 2009, statistics for new-home sales in November, 2009 were released in a joint news release by the Census Bureau and HUD. The report showed an unexpected 11.3% decline in new-home sales from a revised 400,000 homes in October to 355,000 homes in November. Most economists had expected an increase in new home sales in November. These figures are reported at a Seasonally Adjusted Annual Rate (SAAR).

The October figures had already been revised downward by 6.7% to the 400,000 homes from 430,000 homes as previously reported. So counting from the original October report of 430,000 homes, the November sales figure of 355,000 represents a decline of 75,000 homes, or 17.4%.

This is a whopping big decline in just a 30-day period that puts new-home sales back almost exactly at the February, 2009 level of 354,000 homes, and just 26,000 homes above the January low of 329,000 homes.

Inventory expressed in Months of Supply increased to 7.9 months from the revised October figures of 7.2 months, or 6.7 months as originally reported. However, the actual number of homes for sale fell by 7,000 homes from 241,000 homes in October, 2009 to 234,000 homes in November, 2009, a decrease of 2.9%.

The year-over-year Supply of Homes fell by 135,00 homes from 369,000 in November, 2008 to 234,000 in November, 2009, a decline of 36.6%. In terms of Months of Supply, inventory fell from 11.4 months in November, 2008 to 7.9 months in the current report. The highest level of inventory in this cycle was 12.4 months in January, 2009.

So, what happened? Why was there such an enormous decline in reported new-home sales?

Our Conclusions:

1. Only about 10% of the decline was caused by the disconnect caused by the First-Time Home Buyer Tax Credit that was set to expire on November 30, 2009 but was extended and expanded when President Obama signed it into law on November 6, 2009.
2. All of the decline was in sales of homes priced below $400,000. Home sales above $400,000 remained basically unchanged.
3. Within the statistics, there was sharp increase in the proportion of homes sold that were not yet started and a substantial fall off in sales of homes that were under construction but not yet completed or homes that were already completed, causing us to conclude that the sharp reduction in new-home inventories is finally causing a reduction in sales of new homes priced under $400,000.
4. Most of the decline was caused by a single-month, 36.8%, collapse of historic, possibly even unbelievable, proportions in sales of homes in the South region.

Our Predictions:

1. The new Home Buyer Tax Credit will have only a very limited effect on new home sales because the inventories are not there to to support sales in the key price ranges under $400,000. (And new homes that are started from scratch typically require 6-to-8 months to complete from date of contract, meaning that only a limited number of new, relatively small, non-custom homes can be sold in the first 60-to-90 days of the new program that will be completed by the June, 2009 expiration date.)
2. Accordingly, most of the impact of the new Home Buyer Tax Credit will accrue to existing-home sales.
3. Going forward, an increasingly larger proportion of new home sales will be for homes not yet started, because inventories of starter homes have been wiped out by the initial First-Time Home Buyer program, and homes already in inventory are in the wrong price ranges (Too high) to satisfy move-up demand below $400,000.
4. There will be a sharp revision in seasonally-adjusted, South region home sales in December. (Either that, or, it will be discovered that the South region actually broke off from the rest of The United States of America and is sinking in the Gulf of Mexico.)

In preparing our conclusions and predictions, we looked closely at the entire New-Home Sales report for November, 2009. Here are our findings:

1. A surprisingly small amount of the decline, around 5,000 homes, was probably due to the scheduled expiration of the tax credit. (We calculated this by applying the percentage decline in sales under $200,000 compared with the overall percentage decline against the prior month’s sales.)
2. There is something crazy going on with the statistics regarding home sales in the South region geographic breakout. 87.5% of the decline in actual total new-home sales between October and November was in the South. (Total unadjusted, new-home sales fell by 8,000, sales in the South fell by 7,000. Meanwhile, the rest of the country stayed pretty much unchanged.)
3. Upon examining the South region further, the Seasonally Adjusted Annual Rate of sales in the South region was only 179,000 homes. We reviewed the history of this series on the Census Bureau website, and this is the lowest November ever recorded in the 36 years since the regional breakdowns began in 1973, and the lowest monthly sales recorded in 18 years since the 170,000 home sales reported for January, 1991.
4. Since monthly regional breakdowns for the South region began in 1973, there have only been 8 months ever reported under 179,000: once in the 1991 housing recession; four times in the great 1980-1982 housing recession; and three times in the 1973-to-1975 time period when the regional breakdowns first started.
5. In the month following the 8 monthly reports where South region sales fell below the current level of 179,000 homes, sales increased the following month by an average of 18.4%. Only one month declined: Sales in December 0f 1974 fell 9.0% after having fallen 3.8% in November, 1974.
6. The breakdowns in sales by price range show that the entire decline in sales was almost evenly spread among the first four price categories: Under $150,000; $150,000 to 199,999; $200,000 to $299,999; and $300,000 to $399,999.
7. Home sales above $400,000 were unchanged at 3,000 homes in November, causing their share of total sales to rise by 4 percentage points from 9% in October to 13% in November.
8. The breakdowns by Stage of Construction shows an increase of 41.5%  in the share of sales of homes not started from 21.2% of total sales in October to 30.0% in November.
9. The share of home sales under construction but not yet completed fell 9.1% from 33.3% of total sales in October to 30.0% in November.
10. The share of completed homes fell 12.1% from 45.5% of total sales in October to 40.0% in November.
11. In analyzing the homes for sale at the end of each month broken down by the stage of construction and the number of sales of that category the following month, there was a 20.2% increase in the percentage of home sales for homes that were not already started from 18.8% in October to 22.6% in November.
12. However, there was an 32.3% decrease in the percentage of home sales for homes under construction from 9.9% to 6.7%.
13. And there was a 30.9% decrease in the percentage of home sales for completed homes from 13.6% to 9.4%.

These findings caused us reach the conclusions and make the predictions listed above.

New Home Sales Tumble 11.3% in November, But Not Due To Drop Off In First-Time Home Buyers?

The U. S. Census Bureau announced yesterday that sales of new one-family homes  dropped 11.3% in November 2009 from the previous month to 355,000 units. Regionally, results were mixed, with the West down -9.2%, the South down -21.1%, the Midwest up +21.4%, and the Northeast down -3.3%.

The inventory of homes for sale expressed in months of supply rose to a 7.9 month supply after falling the previous month to a 7.2 month supply. Paradoxically, the actual number of homes for sale fell by 7,000 homes from 241,000 homes in October to 234,000 homes in November. However, the inventory of homes is traditionally expressed in the number of months of supply, in which the number of homes available for sale divided by 1/12th of the Seasonally Adjusted Annual Rate (SAAR) of sales for the most recent month. This supply figure was at 11.4 months a year ago and peaked at 12.4 months in January 2009. Many real estate professionals consider 6-to-7 months of supply a “Normal” market.

So the inventory number was good, but not as good as previous months.

The drop in sales is not surprising in that the First Time Home Buyer Tax Credit was originally to expire on November 30, 2009, and we anticipated that buyers would have run out of time to buy a home and still close by the end of November.

This theory would suggest that you would see sharply lower sales of lower-priced homes as first-time home buyers dropped out of the market because of the end of the original home buyer tax credit; whereas, move-up buyers would be unaffected.

However, this is not what seems to have happened. Sales fell 11.3%, but the percentage share of sales to buyers of homes under $200,000, the typical first-time home buyer price range, stayed the same as it was in October at 45%.

The share of sales in the first and second move-up price range, $200,000 to $400,000, actually lost share, falling 4 percentage points from 45% in October to 41% in November. And the share of sales of homes above $400,000 gained the 4 points, rising from 9% in October to a 13% share in November.

So it appears that new home sales fell most strongly in the middle price ranges in November, with lower-priced homes falling in total but maintaining their share of total sales. And higher-priced homes above $400,000 not only increased in market share, but they also increased by 28.2%  in actual unit sales from 36,000 homes in October to 46,150 homes in November.

Nothing jumps immediately to mind that would explain this unexpected trend in the middle and upper price ranges. (Any thoughts from the readers on this?)

See our subsequent analysis and speculations on this topic at: https://regisskeehan.wordpress.com/2009/12/26/why-did-new-home-sales-for-november-2009-fall-look-to-the-south-and-falling-new-home-inventories-for-answers-predictions-for-the-future/

Even though the Tax Credit was extended and signed by President Obama on November 6, 2009, it should take several weeks before the next batch of home buyers can get themselves geared up to buy a home.

So we would expect new home sales to fall in November, and probably even in December too before rising again in January.

Let’s see what next month’s report brings.

See the full report: http://www.census.gov/const/newressales.pdf