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Sales Of New Homes Fell By 26% In 2007The housing industry, caught in a maelstrom of sinking demand, rising foreclosures, and bulging inventories, is in its worst slump in decades, a growing body of economic evidence shows. The New York Times
Sales of new homes fell last year by 26 percent, the steepest drop since records began in 1963, the Commerce Department said on Monday. Last week, the National Association of Realtors reported that sales of previously owned single-family homes, a large portion of the overall housing market, suffered their biggest annual drop in 25 years. And the median price of those homes fell for the first time in at least four decades, and possibly since the Great Depression. Some economists predict the market may start to recover in the summer. Others are less optimistic. “There is no sign of a bottom in any of these data,” wrote Ian Shepherdson, a London-based economist at High Frequency Economics. Last month alone, sales of new homes tumbled 4.7 percent, to a 604,000 annual rate, the smallest monthly sales figure since February 1995. Prices also fell sharply. In December, the median price of a new home fell to $219,200, down 10.9 percent from December 2006. “No matter which way you look at it, the December new home sales report is simply awful,” wrote Dimitry Fleming, an economist at ING Bank. December capped off a painful year for home builders, who have watched demand dry up as buyers abandon contracts or stay on the sidelines with the expectation that prices will fall further. For the year, the median price of new homes rose just 0.2 percent, to $246,900. A wave of foreclosures and tightened lending standards have made it more difficult to obtain a mortgage, even for buyers with good credit ratings. And banks have been more reluctant to lend in light of the subprime mortgage crisis. Builders are now trying to lure buyers by dropping prices and throwing in incentives like new appliances. They have also cut back on new construction. But the strategy has failed to make a dent in inventories: the backlog of new homes on the market ticked up last month to 9.6 months’ supply based on the current sales rate, the Commerce Department said. Sales of new homes were down in most regions of the country, with the steepest declines in the South and West. There was a slight sales uptick in the Northeast. The Commerce Department also revised down its estimate for new home sales in November, to a 634,000 annual pace. It has originally estimated a rate of 647,000. Tag CloudExternal InformationAdditional InformationGetty Images to Buy Celebrity Photo Distributor...Flight Centre rejects deal in blow to private equity... Economix: Truth, Fiction and Lou Dobbs... New Crop of Books on the Evils of Wall Street Misses Old Standards... Where Am I?News Main Page - Business - Sales Of New Homes Fell By 26% In 2007 |
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