New-Home Sales Tumbled 9% Amid Falling Prices in November

Wall Street Journal ^ | 28 December 2007 | JEFF BATER

[shrinkermd]

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."

[1Old Pro]

Makes sense, especially given more qualification scrutiny.

[Tarpon]

I dare say it might have been a touch cold in about half the country to go house hunting. That global warming and all, makes it hard to house hunt and shovel. We have relatives in NH and it has been brutal.

[MNJohnnie]

Crisis! Hysteria! Quick! Give us the keys to the Federal Treasury so we can bail out fat cat bankers who made stupid business decisions otherwise you are all going to die!!!!

The 5% of the tail of the market does not wag the 95% of the dog. The only place this is a crises is in certain mega bank board rooms where they are facing having to write off some bad debt.

Easy cure for this. The banks can reneogiate loans instead of foreclose. That will dry up the excess supply of homes and get the banks out of the property management business.

[digger48]

They’ve been building housing units here, by the 10’s of thousands. McMansion subdivisions by the hundreds.

the market here was saturated with housing.

But property taxes here, have done far- far more to depress sales than anything on a national level has

[Riodacat]

But property taxes here, have done far- far more to depress sales than anything on a national level has

Roger that...

[presently no screen name]

..........property taxes here, have done far- far more to depress sales...

good point.

[ken5050]

It's more than that..prices have yet to find realistic levels..which is why sales have fallen so much. Once present owners accept the fact that their homes are overvalued..i.e. they paid too much..and learn to accept realistic offers, then sales will surge.

The only true valuation of a house is what someonr is willing to pay for it at a specific time..

[Not_Who_U_Think]

At least in my county, rapid residential development has led to a massive school building campaign, with property taxes going up about 25 percent - or an additional 75 bucks a month on a typical home. It’s bound to strain many family budgets, whether their mortgage resets or not.

[Not_Who_U_Think]

At least in my county, rapid residential development has led to a massive school building campaign, with property taxes going up about 25 percent - or an additional 75 bucks a month on a typical home. It’s bound to strain many family budgets, whether their mortgage resets or not.

[A.Hun]

New home sales can fall a lot farther....and probably will. We are at the end of a 20 year boom, and the market is saturated. Extraordinarily low interest rates postponed the inevitable by at least three years.

[shrinkermd]

Thanks, for the great post.

[A.Hun]

My pleasure.

[digger48]

Kind of the problem here. People moved out of the city for the reasons that people want out of the city.

Now the burbs have to provide the schools and the public works infrastructure to service them.

$300-400 a month in taxes for a family in a starter home is hard to swallow.

But so is $1000/month rent for an apartment

[Vet_6780]

Once present owners accept the fact that their homes are overvalued..i.e. they paid too much..and learn to accept realistic offers, then sales will surge

We're still in the early stages of denial. Two generations have been indoctrinated on cheap credit and the infallibility of real estate. It will take a lot to get rid of those illusions.

Right now, capitulation appears to be a distant prospect.

[gitmo]

Aren’t the illegal aliens buying homes Americans won’t buy?

[montag813]

In Manhattan, condo prices went up 5%, and inventory is at a 4 year low.

[fightinJAG]

Surprisingly, there are still folks unwilling to admit that the housing market had a bubble and it burst. Or, as one economist put it, crashed.

Go figure.

[fightinJAG]

Great post.

So, for those who now find themselves upside down, how long do you think it will take for prices to climb back up? Most say it’s about five years down, and five years to get back up. But if it’s a twenty year low, would it take twenty years to get back up again?

[dragnet2]

In Manhattan, condo prices went up 5%, and inventory is at a 4 year low.

My advise? The Fedgov is going to bring in millions of people into the country the next decade so. Hang on to your real estate a few more years and watch for prices to jump in the more desirable areas, it's going to happen, sooner than most realize.