Sales of new homes plunged in March to the lowest level in 16½ years as housing slumped further at the start of the spring sales season.
The median price of a new home in March, compared with a year ago, fell by the largest amount in nearly four decades.
The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.
The median price of a home sold in March dropped by 13.3 percent compared with March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.
The dismal news on new home sales followed earlier reports showing sales of existing homes fell by 2 percent in March. Housing, which boomed for five years, has been in a prolonged slump for the past two years with sales and home prices falling at especially sharp rates in formerly boom areas of the country.
For March, sales were down in all regions of the country, dropping the most in the Northeast, a decline of 19.4 percent. Sales fell by 12.9 percent in the West, 12.5 percent in the Midwest and 4.6 percent in the South.
In other economic news, orders to factories for big-ticket manufactured goods fell for a third straight month in March, the longest string of declines since the 2001 recession, while applications for unemployment benefits fell by 33,000 to 342,000.
The Commerce Department said demand for durable goods dropped by 0.3 percent last month, a worse-than-expected performance that underscored the problems manufacturers are facing from a severe economic slowdown. The last time orders fell for three consecutive months was from February to April of 2001, when the country was sliding into the last recession.
The weakness in manufacturing orders was led by a 4.6 percent drop in orders for autos, a sector hard hit by soaring gasoline prices, and the weakening economy, which have cut sharply into car sales. Orders in the category that includes home appliances fell by 6.6 percent. This industry has been hurt by the two-year slump in home sales.
President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, economists who believe the country has fallen into a recession pointed to the string of declines in manufacturing orders to support their view.
"The broad swath of data in the March (orders) report is indicative of a mixed set of conditions in a factory sector that is, overall, in a mild recession," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.
The Labor Department reported that claims for unemployment benefits fell by 33,000 last week to 342,000. Economists had been expecting claims to rise by 3,000. The four-week moving average for claims fell by 7,250 to 369,500. [Mindfully.org note: More on labor stats]
Even with the improvements, analysts said the weak economy is still putting greater pressures on the labor market. The unemployment rate climbed to 5.1 percent in March as businesses laid off the largest number of workers in five years.
Economic growth slowed to a near-standstill at the end of last year as the economy was battered by the prolonged slump in housing and a severe credit crunch that has resulted in billions of dollars of losses at many of the nation's largest financial institutions and has made it harder for consumers and businesses to get loans.
Consumer sentiment, meanwhile, has plunged to recessionary lows as Americans have also watched gasoline soar to an average price above $3.50 per gallon nationally.
The 0.3 percent drop in orders for durable goods, items expected to last at least three years, followed even bigger declines of 0.9 percent in February and 4.4 percent in January.
Orders for all transportation products fell by 4.6 percent, reflecting the big drop in demand for autos. Orders for commercial aircraft actually rose by 5.5 percent while demand for defense aircraft surged by 29.4 percent. Many defense industries have seen big increases reflecting the wars in Iraq and Afghanistan.
A key category viewed as a proxy for business investment plans showed no increase in March after a big 2 percent drop in February. Businesses have cut back on plans to expand and modernize as the economy has softened.
source: 24apr2008
This article originally ran on June 20, 2007
Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)
Most overvalued U.S. markets
As the housing slowdown continues, which state has the greatest threat of experiencing home-price declines? California, according to a new report by National City Corp and Global Insight, a CNNMoney.com article says. The survey, which determines what housing prices should be using factors such as selling prices, population density, interest rates and income levels, ranks Bend, Ore., as having the most "overvalued" (i.e., overpriced) housing market. Overvalued markets — where housing prices are most likely to fall — tend to be in places that saw big price run-ups during the boom, including California, Florida, New York and Massachusetts, the article says. The survey, which looked at fourth quarter 2006 data for 317 top metro markets, found that 157 of the cities had seen price drops during that quarter. The report ranks Dallas as the most undervalued city in the U.S.; Texas lays claim to four of the most undervalued. For an interactive map of housing markets by median price and valuation, visit National City's Web site.
Most expensive city
If you're going to transfer overseas, you might not want to live in Moscow. For the second year in a row, the city has been ranked as the world's most expensive, according to a survey of 143 international cities by Mercer Human Resource Consulting, the Associated Press says. Contributing to Moscow's high cost of living is the appreciating ruble, the AP says. London ranked as the next most expensive city, followed by South Korea's Seoul. An expatriate can expect to shell out $4,000 a month for a luxury two-bedroom apartment in Russia's capital, the Associated Press says.
It's elementary
The better the local elementary school, the more house hunters will pay to purchase a neighborhood home, says an article by the New York Times. The article points to a Trinity College study that looked at 8,736 home sales between 1996 and 2005 and compared selling prices against grade-school test scores in 11 school districts in West Hartford, Conn., a blue ribbon school district. The study found that every 12% difference in exam scores for a standardized test taken by Connecticut students in grades three through eight secured a rise in selling price of $5,065, the newspaper says. For example, homes in an area that sends students to West Hartford's Lloyd H. Bugbee School (where 99% of fourth graders scored at or above proficiency in math, 93% scored as such for reading and 87% scored at that level for writing) tend to sell for more than houses in an area served by the Whiting Lane School, which has lower test scores (87% scored at or above proficiency in math, 66% scored at that level in reading and 68% for writing) — despite the similarity of the two neighborhoods, the article says.
Open House 'junkies'
Been to an open house lately? If you have, it's possible you're not even looking to buy a new home, says an article by the Buffalo News. While 87% of 2004 home buyers found open houses to be "very useful" in their house search — according to data by the National Association of Realtors — some who go to these events aren't serious house hunters. Instead, they are attracted by the "snoop factor" or are looking to fill their Sunday afternoon, the newspaper says. Open houses can be a way to gauge what's going on in the neighborhood, or just to see what your neighbor's kitchen looks like, the News says.
Bogged down in Bay Area
In May, home sales saw a year-over-year drop of 17.4% in the San Francisco Bay Area, reaching the lowest level in 12 years, according to an article by the San Francisco Chronicle. Meanwhile, the median price increased by 5.9% to $720,000, the newspaper says. The price increase doesn't reflect a rise in home prices, but signals a trend in which more high-end homes are selling than lower-cost ones, the Chronicle says. Local neighborhoods experiencing slower sales include sections of Richmond, Oakland and Santa Rosa, among others, while Belvedere, Tiburon and Cupertino are included in areas seeing increased buyer interest, the paper says.
source: 24apr2008
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