Housing Market Stays Cool

Don Hogsett, January 8, 2007

The broad U.S. housing market showed some ambiguous signs of bottoming out during November, with all three sectors of the market making gains.

But November is historically the weakest month of the year in terms of housing activity, made short by the long Thanksgiving holiday, making it an unreliable bellwether. Underlining the November dilemma, when measured on a seasonally adjusted basis, sales of pricey new homes improved by 3.4%, to 1.05 million units, rebounding from a 3.8% drop the month before.

But the raw, unadjusted numbers out of the Commerce Department, show new home sales at a substantially lower level during the month, at 72,000, their lowest level in almost four years. And even when measured on a seasonally adjusted basis, to even out seasonal shifts and monthly variances, new home sales were still down by 16.8% from their 13-month high of 1.26 million units recorded last December.

Making headway, in addition to new home sales, seasonally adjusted housing starts jumped up by 6.7%, to 1.6 million units, after falling back by 6.7% in October. And with builders growing antsy as interest rates rise and houses go unsold, starts are still 29.9% beneath their 13-month high of 2.3 million units set in February. Even though starts improved somewhat during November, in a sign of a continuing slowdown, the number of building permits taken out by home builders continued to slide in November, falling by 5.2% to 191,000, down more than 20% from a high of 239,000 units in June.

Sales of existing homes, which account for more than two-thirds of all housing activity, were virtually flat, edging up just 0.6% to a seasonally adjusted 6.3 million units. Even with the November gain, resales were off by 10.7% from their year high of 7.0 million units last November.

Housing by region
Month-To-Month % Change, November 2006

Source: U.S. Department of Commerce and National Association of Realtors
Northeast 6.0 8.6 22.5
Midwest *0.0 -6.3 22.4
South -1.6 18.5 -9.3
West 0.8 -8.1 19.0

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