“Bottom line, after bottoming at 273,000 in Feb 2011, down from 1.389 million in July 2005, new home sales continue their bottoming process at near the lowest level since at least the early 1960's,” reminds Miller Tabak’s Peter Boockvar. “A sharp recovery though from this bottoming is a different story, and patience will have to endure for reasons we're all well aware of still.”
Those reasons include over four million properties with delinquent loans that may or may not be in the foreclosure process yet, a still-tough credit market, weak consumer confidence and a weak recovery in the jobs market. You can see this weakness when you look inside the new home sales numbers … the Northeast and South saw increases month-to-month, but sales fell in the Mid-West and West, where so much of the distressed housing supply remains.
New homes make up less than 10 percent of the overall housing market, and builders rely on first-time homebuyer demand, which is still weaker than it has been historically. Home ownership is still shrinking and will likely continue. More than half of the 114 economists surveyed by Zillow this month said they expect that in five years the homeownership rate will be below 65.4 percent, which was the last recorded rate in the first quarter of this year. One in five said it would dip below 63 percent, “testing or breaking the 62.9 percent rate established in 1965, the lowest on record,” according to the Zillow report.