According to the U.S. Census Bureau new home sales fell to an annualized run-rate of 276 thousand in July, the lowest level on record.

I don't want to exaggerate the importance of the figure since it is primarily a function of the number of homes being built, which in turn is a reflection of the economy's dire state.

A Few Observations

• While records only go back to 1963, it is likely that the last time so few new homes were sold the country was either in The Great Depression or fighting World War II.  This is noteworthy given that the country's population during the 1930's was less than 130 million.  Today the U.S. has more than 310 million people.

• In January 1995 (when the Housing Bubble began) homes were selling at an annualized pace of 626 thousand

• In January 2009 (the month before the Stimulus Spending Bill was passed) new home sales were the equivalent of 339 thousand a year.  For three consecutive months new home sales have been well below pre housing stimulus levels.

• The number of housing units for sale has been shrinking monthly for years (which partially explains the low number of transactions).  What is interesting is that despite the falling number of units on the market, inventory for sale remains elevated at 9.1 months.

I reiterate my observation that Obama's housing stimulus efforts have worsened market conditions, failed to resolve the fundamental problems of overvalued and overleveraged housing, and extended the housing crisis potentially by years.


Excerpt - 10/2/08 - Link

"There are steps that the government can take to facilitate the stabilization of the housing market and limit collateral damage to both the credit markets and the broader economy.  Any action which would attempt or have the effect to prop up housing prices at an artificial value, though, is counterproductive.  Such initiatives will only lengthen, deepen and increase the damage caused by the inevitable march to a sustainable equilibrium.  The Japanese have provided us with a useful case study on this subject.  Don’t stand in the way of the markets clearing.  Any government action should be undertaken with a design to facilitate this clearing process and an understanding that substantial economic pain is unavoidable."

Excerpts - 2/10/09 - The Stimulus Bill, Like All Government Interference To Date, Will Fail

"The Stimulus Bill will not work because it can not work.  Anyone who truly understands what is transpiring in the economy will recognize that this is the largest, single instance of waste in the history of the World."

...

"Things will get worse.  This is inevitable.  No government initiative designed to distort economic activity, prop up prices or encourage a return to unsustainability amongst consumers will work."