US new-home sales slid to their lowest level since the 1991 recession during March, according to data released Thursday by the Commerce Dept., providing the latest evidence that a bottom in troubled housing markets across the nation has yet to materialize. New single-family homes sales activity fell 8.5 percent last month to a seasonally-adjusted annual rate of 526,000 -- a much stronger drop in sales activity than economists had been expecting, and the lowest monthly reading since October 1991. Dow Jones reported that economists had predicted a 1.9 percent drop ahead of the March data. A slight bit of good news in the report may be that new home inventories appear to now be falling, as builders continue to pare back activity. March inventory registered a seasonally-adjusted estimate of 468,000; that's 1.1 percent below February's inventory level, and nearly 15 percent below year-ago estimates.
extrapolated NODs for 2008
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The problem, of course, is that the continued steep drop in sales is consistently outpacing any cutbacks made by builders -- resulting in a continued upward jump to months of supply. MOS registered 11 months during March, the Commerce Dept. said, up nearly 8 percent from February and nearly 33 percent above year ago MOS estimates. The graph to the right shows months of supply relative to recessions in modern American history, courtesy of the excellent Calculated Risk blog (and used with permission). As that blog notes, months of supply is now at its highest level since 1981, and appears poised to soon break the all-time record set in April of 1980. Many market watchers had hoped the traditional spring selling season might take some of the pressure of of the nation's housing market; it appears now that the selling season boost never arrived, and sources suggested to HW that the trend portends a long summer for many of the nation's home builders.