 | New home sales fell 8.1% in October |
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Implications: The market for new homes remains very sluggish, still apparently suffering from the expiration of the homebuyer tax credit. The tax credit, which required buyers to sign a contract by the end of April, moved sales forward into the early part of this year. New home sales, which are counted at contract, increased to a 414,000 annual pace in April, but have averaged only 290,000 in the past six months. A large inventory of foreclosed homes – many of them built within the past decade – is also depressing new home sales. It is important to note that, despite the slow pace of sales, inventories are still declining. Single-family homes are being started at about a 435,000 annual rate. Of these, only about 255,000 need to be sold, as many are being built on land already owned by the future homeowner. Given a growing population, the new home sales pace should more than triple over the next several years to roughly 950,000. On the price front, the median sales price of new homes fell to $194,900 in October, the first time the median sales price has been below $200,000 since 2003. This price measure is down 9.4% versus a year ago. In other home price news this morning, the FHFA index, a measure of prices for homes financed by conforming mortgages, fell 0.7% in September and is down 3.4% in the past year.
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