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By Martin H.
Bosworth
ConsumerAffairs.com
December 29, 2007
Sales of new homes dropped to their lowest point in 12 years, a sign that the nationwide housing slump has a long way to go before hitting bottom.
The Commerce Department reported that new single-family home sales dropped 9 percent to an annual rate of 647,000 in November from 711,000 in October. Analysts had been expecting a home sales pace of 720,000 for the month. November's home sales statistics were the worst showing since April 1995, when the pace of sales was 621,000.
Home inventories continued to increase as well, with 9.3 months' worth of unsold homes remaining on the market. Excess inventory of unsold homes will continue to exert downward pressure on home prices until the "glut" of homes is sold off. The median sales price of a new home dipped to $239,100 in November.
Sales dropped regionally in every part of the country except the West. Sales decreased by 19.3 percent in the Northeast, 27.6 percent in the Midwest, and 6.4 percent in the South. New home sales increased by 4 percent in the West.
Grim tidings
The news of home sales declines followed Wednesday's news that overall national home prices have hit their lowest level in sixteen years, according to the Case-Shiller home price index.
Homes have been going into foreclosure at record levels due to homeowners' inability to keep up with ballooning mortgage payments, high utility costs, and gas prices all at the same time. The economic crunch has left many unsold homes on the market, depressing prices even further.
Some analysts have predicted home prices could fall as much as 30 percent in the most heavily overbuilt markets, with a recovery in the housing sector not coming until 2010 at the earliest.
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