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Housing

New Home Sales Heading Wrong Way (XHB, ITB)

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By Douglas A. McIntyre Published
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New home sales in December went back the wrong way, which was largely expected considering the data we had already seen from the housing sector in the last week.  The problem is that the drop in new home sales was far more than what was expected.  The December new home sales data from the Commerce Department fell by 7.6% to 342,000 annualized, while Dow Jones had estimates of 365,000.  We are watching the SPDR S&P Homebuilders (NYSE: XHB) and iShares Dow Jones US Home Construction (NYSE: ITB) ETFs as they are both still lower on the news.

The November data was revised to 370,000 annualized versus 355,000 originally reported.  One issue which may highlight the weak housing market is that the annual supply rose to 8.1 months in December from a revised figure of 7.6 months.  As supply grows, the more empty houses are sitting on the market that act as  competition for those who want to sell a home.  Still, the data is somewhat mixed there as the inventory figure was put at 231,000 homes for sale versus a prior 235,000.  The full-2009 data for new home sales was down almost 23% to an unadjusted figure of 374,000 from the 485,000 recorded in 2008.

The drop was expected because of the channel of house closings being so high in October and November ahead of what many buyers feared would be the end of the first time home buyer tax credits.  That has been extended through April.

After the news, SPDR S&P Homebuilders (NYSE: XHB) is down 0.7% at $14.99 and iShares Dow Jones US Home Construction (NYSE: ITB) is down 1.2% at $12.05.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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