Single-family home sales fell 16.8 percent to a seasonally adjusted annual rate of 4.79 million in December from a pace of 5.76 million in November, but are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5.0 percent to 4,566,000.
For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005, according to NAR.
Lawrence Yun, NAR chief economist, said there were no surprises in the data. "It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit," he said. "We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year."
An NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.
The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. "The median price rose because of an increased number of mid- to upper-priced homes in the sales mix," Yun said. It was the first year-over-year gain in median price since August 2007.
Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply at the current sales pace, up from a 6.5-month supply in November. Raw unsold inventory is 11.1 percent below a year ago, the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008.
Distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008; distressed homes accounted for 36 percent of total sales last year.
Regionally, existing-home sales in the Northeast dropped 19.5 percent to an annual level of 910,000 in December but are 21.3 percent above a year ago. The median price in the Northeast was $241,700, up 3.2 percent from December 2008.
Existing-home sales in the Midwest fell 25.8 percent in December to a level of 1.15 million but are 8.5 percent higher than December 2008. The median price in the Midwest was $143,200, which is 1.8 percent above a year ago.
In the South, existing-home sales dropped 16.3 percent to an annual pace of 2.01 million in December but are 15.5 percent above December 2008. The median price in the South was $152,000, down 1.0 percent from a year ago.
Existing-home sales in the West declined 4.8 percent to an annual rate of 1.38 million in December but are 15.0 percent higher than a year ago. The median price in the West was $236,000, up 2.7 percent from December 2008.
New Residential Sales
Sales of new one-family houses in December 2009 were at a seasonally adjusted annual rate of 342,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This was 7.6 percent below the revised November rate of 370,000 and was 8.6 percent below the December 2008 estimate of 374,000.
The median sales price of new houses sold in December 2009 was $221,300; the average sales price was $290,600. The seasonally adjusted estimate of new houses for sale at the end of December was 231,000. This represents a supply of 8.1 months at the current sales rate.
An estimated 374,000 new homes were sold in 2009. This is 22.9 percent below the 2008 figure of 485,000.
Housing Starts
According to the U.S. Census Bureau, privately-owned housing starts in December were at a seasonally adjusted annual rate of 557,000. This was 4.0 percent below the revised November estimate of 580,000, but was 0.2 percent above the December 2008 rate of 556,000.
Single-family housing starts in December were at a rate of 456,000; this was 6.9 percent below the revised November figure of 490,000. The December rate for units in buildings with five units or more was 92,000.
An estimated 553,800 housing units were started in 2009. This was 38.8 percent below the 2008 figure of 905,500.
Retail Sales
According to the U.S. Census Bureau, advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $353.0 billion, a decrease of 0.3 percent from the previous month, but 5.4 percent above December 2008. Total sales for the 12 months of 2009 were down 6.2 percent from 2008. Total sales for the October through December 2009 period were up 1.9 percent from the same period a year ago.
Retail trade sales were down 0.2 percent from November 2009, but 5.9 percent above last year. Gasoline stations sales were up 33.6 percent from December 2008 and nonstore retailers sales were up 10.3 percent from last year.
On an adjusted basis, sales at furniture and home furnishings stores were slightly ahead of November 2009 sales, but were down 3.8 percent from December 2008. For the year, sales at these stores were down 11.1 percent from the 2008 year.
Consumer Prices
On a seasonally adjusted basis, the December Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the index increased 2.7 percent before seasonal adjustment.
The seasonally adjusted increase in the all items index was broad based, with the indexes for food, energy, and all items less food and energy all posting modest increases. Within the latter group, a sharp rise in the index for used cars and trucks was the largest contributor to the 0.1 percent increase, while the indexes for airline fares, apparel, and lodging away from home rose as well. In contrast, the indexes for rent and owners’ equivalent rent were unchanged and the index for new vehicles declined.
For the 12 month period ending December 2009, the CPI-U rose 2.7 percent, compared to 0.1 percent for 2008. The larger increase was primarily due to the energy index, which rose 18.2 percent during 2009 after falling 21.3 percent in 2008. The energy upturn was caused by the gasoline index, which rose 53.5 percent in 2009 after declining 43.1 percent in 2008. The food index, which rose 5.9 percent in 2008, fell 0.5 percent for the 12 months ending December 2009, the first December-to-December decline since 1961.
The index for all items less food and energy rose 1.8 percent during 2009, the same increase as in 2008. This identical increase was the result of offsetting factors. Pushing the index higher were vehicle prices, which rose in 2009 after declining in 2008. Additionally, the apparel index turned up in 2009, rising 1.9 percent after declining in each of the previous two years. The medical care index rose more rapidly in 2009, increasing 3.4 percent after a 2.6 percent increase the previous year, and the tobacco index increased 30.1 percent in 2009 after rising 6.3 percent in 2008. Largely offsetting these accelerations was the shelter index, which posted its smallest annual increase since its inception in 1953. It increased only 0.3 percent after increasing 1.9 percent in 2008. Also, the indexes for recreation and for household furnishings and operations both declined in 2009 after rising in 2008.
Employment
The U.S. Bureau of Labor Statistics reported that nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.
In December, the number of unemployed persons, at 15.3 million, were unchanged. At the start of the recession in December 2007, the number of unemployed persons was 7.7 million, and the unemployment rate was 5.0 percent.
Durable Goods Orders and Factory Shipments
According to the U.S. Census Bureau, new orders for manufactured durable goods in November, up two of the last three months, increased $0.4 billion or 0.2 percent to $166.9 billion, unchanged from the previously published increase. This followed a 0.7 percent October decrease.
Computers and electronic products, also up two of the last three months, had the largest increase, $1.2 billion or 4.9 percent to $26.0 billion.
Shipments of manufactured durable goods in November, up three consecutive months, increased $0.4 billion or 0.2 percent to $175.7 billion, revised from the previously published 0.3 percent increase. This followed a 0.7 percent October increase.
Machinery, up two of the last three months, had the largest increase, 2.0 percent to $22.6 billion.
Shipments of furniture and related products fell 5.3 percent from October and were down 14.7 percent compared to last year. Year-to-date, shipments in this category were down 19.8 percent.
Summary
November results were certainly encouraging for a change. While comparing to very weak results from last year, coupled with the October results, we may in fact be reaching the bottom, assuming the economy doesn’t hit another snag. Two months do not really create a trend, but it is certainly a start. That along with recent conversations make us at least begin to feel that we may have finally reached bottom.
While there are still many companies out there that are really hurting, it seems that most companies have made adjustments to current volume levels. Management at most companies have made serious cuts in all levels of expenses, many that hurt, including cutting some good people. But as we have always counseled clients, it is better to cut a few than to lose all of them.
The recent volatility in the stock market is not going to help consumer confidence. On the other hand, hopefully some of the craziness coming out of Washington, may begin to slow down a bit and reduce consumers worries about all of the negative news about deficits, crazy spending, etc.
Hopefully, they are getting the picture that jobs and the economy need fixing more than some other areas of concern. While consumers probably do not feel that good about most news that comes from Washington, hopefully they will not feel worse.
The winter weather is not helping much either, but it won’t be long until spring. Maybe that will make us all feel better. In the meantime, do all you can to hang on. Better days will come. You just need to be here when they get here.
The winter weather is not helping much either, but it won’t be long until spring. Maybe that will make us all feel better. In the meantime, do all you can to hang on. Better days will come. You just need to be here when they get here.
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This Furniture Insights® newsletter report has been re-published with the permission of Smith Leonard PLLC an independent member of the BDO Seidman Alliance.
Firm Profile: Founded in 1930 by BDO Seidman, LLP, the High Point, North Carolina practice was recently acquired by four individuals who have spent the majority of their 100+ year careers building the existing practice. Beginning January 1, 2007, Smith Leonard PLLC became an independent member of the BDO Seidman Alliance. Partners are Ken Smith, Darlene Leonard, Jon Glazman and Mark Bulmer. Among the firm's 32 employees are 18 CPAs.
Service Area – Smith Leonard concentrates primarily in the Triad, but also services companies with domestic locations throughout North Carolina, Virginia, South Carolina and Texas.
Smith Leonard has an extensive network of international relationships that helps service their clients’ needs throughout the world with locations in Asia, Europe, South America, Mexico and Canada. These companies range in revenue size of $2 million to $300 million.
Practice Concentration – The majority of the client base is composed of manufacturing and distribution companies.
Many of its clients are either furniture manufacturers, distributors or suppliers to the furniture industry. Smith Leonard also services companies in retail, transportation, insurance, not-for-profit entities and employee benefit plans. Smith Leonard offers a full range of accounting and consulting services including audits, compilations, reviews, tax planning and compliance. The partners and staff of Smith Leonard also assists clients in mergers, acquisitions, business consulting, cash flow projections, and tax outsourcing. Individual clients benefit from extensive experience in family wealth services including estate tax planning.
The firm continues to produce monthly and annual statistics for the furniture industry. For more information call (336) 883-018 or e-Mail: ksmith@smithleonardcpas.com