Chalk up another record for the housing and mortgage slump. The number of new homes sold in 2007 fell to an estimated 774,000, according to data released Monday by the Commerce Department -- off 26.4 percent from sales volume in 2006, and according to the Associated Press the largest annual percentage drop on record. The Commerce Department maintains records since 1980. The pinch was felt nearly everywhere but the Northeast, which eeked out an annual 1.6 percent gain in new home sales. Sales in the midwest fell 26.7 percent to 118,000; the south fell 26.3 percent to 412,000; and the west saw volume drop to 181,000, off 32.2 percent for the year. For the month of December, sales of new single-family residential homes fell to a seasonally-adjusted rate of 604,000, 4.7 percent below November's rate and off 40.7 percent relative to one year earlier. Prices dropped in December as well, although prices are rarely analyzed in this report given heavy revisions and a lack of input for builder incentives.
The Calculated Risk blog, as usual, offers strong analysis of macro-economic housing trends such as this. To the right is a graph (used with permission, click for a larger version) that shows new home sales against U.S. recessions dating back to January 1963. Monday's report follows dismal data on existing homes from the NAR last week, which found prices declining for the first time since the Depression-era. Investors, however, were buoyed by the report and took it as a sign that the Fed will cut its key interest rate further this week, after announcing a surprise 75 bps cut to the funds target rate last week. The Down was up nearly 1 percent to 12,324.15 at 2:15 EST; futures suggest the market is expecting a further 50 bps cut.