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October 27, 2010 in Business, Nation/World
New home sales rise after dismal summer
WASHINGTON — Sales of new homes improved last month after the worst summer in nearly five decades, but not enough to lift the struggling economy.
The Commerce Department says new home sales in September grew 6.6 percent from a month earlier to a seasonally adjusted annual sales pace of 307,000. Even with the increase, the past five months have been the worst for new home sales on records dating back to 1963.
Paul Dales, U.S. economist with Capital Economics, called the September home sales encouraging. But he said it doesn’t change the fact that activity remains at extremely low levels.
“That’s unlikely to change for a few years,” Dales said.
Most major homebuilder stocks fell after the report’s release. Toll Brothers Inc. fell nearly 1 percent.
New home sales have risen 9 percent from the bottom in May but are still down 78 percent from their peak sales pace of nearly 1.4 million homes in July 2005. A healthy sales pace is around 800,000 new homes.
Builders are competing with millions of foreclosures and other distressed properties that show no signs of abating. They are unlikely to ramp up construction until those are cleared away and demand picks up.
High unemployment, tight credit and uncertainty about home prices have kept people from buying homes. Government tax credits propelled the market earlier in the year, but those expired in April.
The September sales figures were driven by a 61 percent monthly surge in the Midwest. Sales grew about 3 percent in the South and Northeast. They fell by nearly 10 percent in the West.
The median sales price was $223,800. That was up 3.3 percent from a year earlier.
The number of unsold new homes on the market fell to 204,000, the lowest since July 1968. At the current sales pace, it would take about eight months to exhaust that supply, compared with a healthy level of about six months.
The industry is suffering the fallout of a massive building boom, in which many homes were sold to speculators. They then resold the homes, often to borrowers who took out risky loans and defaulted. Those unsustainable boom times aren’t coming back.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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bdr on October 27 at 10:16 a.m.
Im confused yesterdays news said the opposite is this like some medical advice doctors tout then reverse daily?
Id say housing is crap heading toward the crapper and by 2014 when mandatory insurance is required zapping income…. sales will be flatter than IHOP specials with whip cream.
My advice….if you haven’t bought a home in the 90s then don’t….those prices will return. The wages of the 90s have already reappeared.
scottm on October 27 at 10:47 a.m.
Yesterday’s report was on falling home prices. That included Standard & Poor’s/Case-Shiller latest index for home prices in 20 major U.S metro areas. The average price for all markets fell 0.2 percent in August and 15 cities posted declines.
Today’s news chiefly is about the pace of sales ticking upward in September nationwide.
But often there does seem to be contradictions from day to day, due to reports tracking different markets in different time frames.
de3 on October 27 at 12:38 p.m.
The news report yesterday said that prices had fallen somewhat.
The news report today says that sales increased.
Those are not necessarily inconsistent. Lower prices might generate more sales.
(I tried to post this comment as a single sentence but the SR’s spam filtering would not allow a single sentence with “price” and “sales” in it…)