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WASHINGTON — New-home sales plunged during November to the lowest level in 12 years.
Sales of single-family homes decreased by 9% last month to a seasonally adjusted annual rate of 647,000, the Commerce Department said Friday. It was the lowest pace of sales since 621,000 in April 1995, and analysts expect further retreat, given the size of unsold supply of new houses.
"There is absolutely no indication that home sales have reached a bottom," Insight Economics chief economist Steven Wood said.
Year over year, new-home sales were 34.4% lower than the level in November 2006 — the largest year-to-year decline since 35.3% in January 1991.
"Tighter lending standards now in place are probably limiting activity," said Michael Moran, an analyst at Daiwa Securities America. "In addition, many buyers may have moved to the sidelines for a time in hope of obtaining a more attractive price in the future."
The housing slump reduced gross domestic product, the sum of U.S. economic activity, by more than a full percentage point during the third quarter. While GDP still managed to surge at a sizzling 4.9% rate July through September, it is seen much weaker in the current, fourth quarter — hampered by the housing correction and credit crunch.
Falling home prices can hurt the economy. Consumer spending makes up 70% of U.S. economic activity as measured by GDP. When consumers watch the value of their homes shrink, they tend to feel less wealthy, a mood that can act as a damper on spending plans and, in turn, slow economic growth.
Friday's data showed the median price for a home dropped in November compared to the same month a year prior, down 0.4% to $239,100 in November from $240,100 in November 2006.
"The growing imbalance between demand and supply puts downward pressure on home prices," Lehman Brothers analyst Michelle Meyer said. "We expect national home prices will fall another 10% to a bottom at the end of 2009."
The ratio of new houses for sale to houses sold rose during November to 9.3 from 8.8 in October. Friday's report showed an estimated 505,000 homes for sale at the end of November, down from October's 514,000.
"Inventories of unsold homes remain very high despite slipping for the eighth consecutive month," Insight's Wood said.
Another report Friday showed business activity in the heavily industrialized Chicago area expanded in December. The National Association of Purchasing Management-Chicago business barometer, commonly referred to as Chicago PMI, stood at 56.6 in December, compared with the previous month's 52.9. Readings above 50 signal expansion of economic activity.
Stephen Wisnefski contributed to this article.
source: 28dec2007
WASHINGTON — Sales of new homes plunged last month to their lowest level in more than 12 years, a grim testament to the problems plaguing the housing sector.
The Commerce Department reported Friday that new-home sales tumbled by 9 percent in November from October to a seasonally adjusted annual rate of 647,000. That was the worst showing since April 1995, when the pace of sales was 621,000.
The sales pace for November was much weaker than economists were expecting. They were predicting sales in the weakest sector of the economy to drop by around 1.8 percent, to a pace of 715,000.
The median sales price of a new home dipped to $239,100 in November. That is 0.4 percent lower than a year ago. The median price is where half sell for more and half for less.
By region, sales fell in all parts of the country, except for the West, where they rose.
New-home sales dropped by 19.3 percent in the Northeast. They plunged by 27.6 percent in the Midwest and they fell by 6.4 percent in the South. However, sales increased by 4 percent in the West.
Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.
That market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
With credit now harder to get to finance a home purchase, the problems in housing have grown worse. Unsold homes have piled up. The problems are expected to persist well into next year.
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, it has given Democrats and Republicans politicians including those who want to be the next president plenty of opportunities to spread blame around.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January.
The economy's growth is expected to have slowed to a pace of just 1.5 percent or less in the October-to-December. Analysts believe that the housing and credit troubles will force consumers and businesses to tighten the belts, causing the economy to lose considerable speed. The housing slump has been a drag on overall economic activity, lopping more than a full percentage point off growth during the summer alone.
source: 28dec2007
Sales of new homes hit a 12-year low in November, falling short of even the most skeptical Wall Street estimates.
The unexpectedly weak report suggested that home prices would fall further next year as the housing market struggles to break out of its deepest slump since the early 1990s.
Sales of single-family homes fell 9 percent last month, the Commerce Department said, for a seasonally adjusted annual rate of 647,000, the slowest pace since April 1995.
Inventories rose as well, despite discounts being offered by home builders to attract reluctant buyers. The government estimated that a 9.3 month supply of homes remain unsold, a slight increase from October.
The housing market has been hurtly badly by the drop in sales, which began in the spring. Home loans have been harder to come by after lenders tightened their standards in response to the summer’s subprime mortgage crisis. Americans now appear to be holding out for real estate prices to drop even further in 2008, creating a buyers’ market while leaving sellers in the lurch.
Home builders have begun to cut back on groundbreakings in an effort to narrow the overhang of supply, but Friday’s report suggests the strategy is not working.
“Sales are dropping at such a pace that the pullback in new homebuilding remains insufficient to make any headway in clearing out the sizeable inventories of new homes for sales,” wrote Richard Moody, chief economist at Mission Residential, in a research note.
The mean prices of a new single-family home dropped in November by about $14,000, the government said.
The markets reacted to the news by quickly losing most of there gains for the day, and eventually ended the day flat.
source: 28dec2007
WASHINGTON — The government's latest monthly report on new home sales is expected to deliver more bad news to homebuilders.
A Commerce Department report Friday morning is forecast to show that new home sales fell 1.1 percent in November from a month earlier to a seasonally adjusted annual rate of 720,000 units, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.
The report is scheduled to be released at 10 a.m. EST.
A month ago, the government reported new home sales increased 1.7 percent in October from September. Despite the slight rise, sales were 23.5 percent below-year ago levels.
The median sales price of a new home fell to $217,800 in October, down 13 percent from a year ago and the biggest annual decline in prices since September 1970. The median is the price midpoint.
Credit problems have aggravated an already painful housing slump as many banks shied away from making all but the safest loans as defaults surged.
Many builders such as Centex Corp., Pulte Homes Inc. and Hovnanian Enterprises Inc. were caught with a glut of unsold properties this year when mortgages became hard to get and sales slowed. Builders have slashed prices, but many buyers have stayed on the sidelines because they're having trouble getting mortgages and believe prices will continue to fall.
A widely watched measurement of U.S. home prices, the Standard & Poor's/Case-Shiller index, released Wednesday showed prices fell 6.7 percent in October compared with a year earlier. The decline was the 10th-straight monthly drop and the largest since early 1991.
source: 28dec2007
Sales of new US homes sunk in November to their lowest level in more than 12 years, confirming the grim outlook for the US housing market.
The US Commerce Department said on Friday that new-home sales plunged by 9% in November from October to a seasonally adjusted annual rate of 647,000.
That was the worst performance since April 1995, when the sales were 621,000.
On Thursday, it was reported that demand for US durable goods, products that are expected to last at least three years, inched slightly up in November.
Orders for durable goods increased by 0.1% to a seasonally adjusted $214.67 billion, the Commerce Department said.
A key barometer of US business equipment spending — orders for nondefense capital goods excluding aircraft - - fell by 0.4% last month, after a decline of 2.9% in October.
November shipments for nondefense capital goods excluding aircraft rose by 0.2%, after falling 1.2% in October.
source: 28dce2007
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