New-Home Sales Sink to Lowest Level in 47 Years


Inquiring minds are reading where the Associated Press is reporting that buyers purchased the fewest number of new homes last year on record going back to 1964:

Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.

The year ended on a stronger note. Buyers purchased new homes at a seasonally adjusted annual rate of 329,000 units in December, a 17.5 percent increase from the November pace.

Economists are predicting it could be years before sales rise to a healthy rate of 600,000 units a year.

“The percentage rise in sales looks impressive but 10 percent of next-to-nothing is still next-to-nothing,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics, referencing the December increase. “New home sales are bouncing around the bottom and we see no clear upward trend in the data yet.”

The reason is that builders of new homes are struggling to compete in markets saturated foreclosures. High unemployment and instability in home prices have kept many would be buyers from making purchases.

Home prices fell in November in 19 of 20 major cities measured by the Standard & Poor’s/Case-Shiller index. What is worse is that nine fell to their lowest point since the housing bust.

Further, now economists expect prices will keep falling at least until July of this year.

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