Recent data show ongoing deterioration of housing demand along with sharp reductions in new housing production.
The National Association of Home Builders' proprietary survey of 30 large single-family home builders shows further erosion of gross sales in November (seasonally adjusted). A falloff in cancellations left net sales about flat in November, but the downward trend still appears to be in place.
The ratios of cancellations to either gross sales or the backlog of signed sales contracts have not changed much in recent months, but both ratios remain quite high by historical standards.
NAHB’s broad-based single-family Housing Market Index (HMI), begun in January 1985, held at a record low 9 in early December. Furthermore, all three HMI components — present sales, buyer traffic and six-month sales expectations — as well as measures for all four regions of the country, were at or near record lows in December.
Housing starts and issuance of building permits both fell to record lows in November, and large declines were posted in both single-family and multifamily sectors as well as in all four regions of the country.
These downtrends ensure another major subtraction by residential fixed investment from overall GDP growth in the final quarter of 2008.