New home sales plummeted a much larger-than-expected 8.1% in October to an annual rate of 283,000 units. That bolstered the supply of homes from 7.9 months to 8.6 months.
However, the 8.6 months is based on the paltry number of sales. With the actual supply just above 200,000, the number of homes on the market stands at the lowest reading since the late 1960s.
Still, the big drop in sales reflects the stiff headwinds the housing market continues to face in the wake of the expiration of the tax credits last spring.
Potential buyers are worried about the potential for further declines in prices, and the lack of any meaningful job creation is holding others back, offsetting record low mortgage rates.
In the meantime, weekly jobless claims tumbled 34,000 to 407,000 in the latest week, indicating that economic activity is accelerating and the job market is set to pick up.
Next week's data may be blurred by the Thanksgiving holiday, but the downward trend is definitely welcome news.
Wednesday, November 24, 2010
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