The overhang of the Cash For Clunkers effect is starting to shift to all sectors of the economy, with New Home Sales being the latest victim: sales decreased 3.6% to a 402,000 annual pace, lower than the median forecast of economists, which was 440,000. The actual number came in below even the lowest expectations of 412,000. Additionally, the median price of a new home dropped 9.1 percent from September 2008. When is the last time anyone heard a CNBC anchor talk about green shoots again?
More detail from Bloomberg:
The decrease in sales was led by an 11 percent drop in the West and a 10 percent decrease in the South. Purchases in the Midwest jumped 34 percent and were unchanged in the Northeast.
Builders had 251,000 houses on the market last month, the fewest since November 1982. It would take 7.5 months to sell all homes at the current sales pace, the same as in August.
Sales of new homes, which make up less than 10 percent of the market, are tabulated when a contract is signed and may therefore begin cooling weeks before the Nov. 30 deadline by which buyers must close a transaction to be eligible for the tax credit.
As sector after sector roll to reasonable trendlines, expect many more negative surprises, at least until such time as the administration realizes that the US consumer isn't going anywhere in a hurry and announces the latest brilliant (and educational) bail out scheme: Kash for Kindles to justify soon to be quadruple digit earnings multiples.