New-Home Sales Rise But Slump Is Far From Over
Sales of new single-family homes rose 1.7% in October from a September level that was revised down sharply, while the median sales price plunged, showing ongoing weakness in the ailing housing sector.
New single-family home sales rose to an annual rate of 728,000 from a downwardly revised rate of 716,000 in September, the Commerce Department said.
October's rise was the first since April, but it came after a revised September sales pace figure that was the lowest since January 1996.
Analysts polled by Reuters were expecting October sales to fall to an annual rate of 750,000 from the September previously reported rate of 770,000.
Analysts noted that while the sales pace climbed in October, it started from downwardly revised figures in prior months.
"The overall picture is housing is still going to decline at least for the rest of this year," said Adam York, economic analyst at Wachovia Economics in Charlotte, North Carolina. "We
would not be willing to call September the bottom."
In October, the median sales price for a new home fell 8.6 percent to $217,800 from $238,400 in September - the sharpest month-over-month decline since September 1981. The price was
down 13 percent from the year-earlier month, the largest year-over-year fall since September 1970.
There were 516,000 new homes for sale at the end of the month, a 2.3 percent drop from September. It would take 8.5 months to clear that inventory at the current sales pace, down
from the 9 months' supply reported in September.
The report comes a day after a realty trade association said sales of previously owned homes fell 1.2 percent to a record low 4.97 million-unit pace amid a nationwide credit crunch that has curbed available mortgage loans.
Existing home prices fell at a record pace and the inventory of homes for sales increased as the housing market felt the pinch of tighter lending standards.
The median existing home price fell 5.1 percent from a year ago to $207,800 and the total housing inventory rose 1.9 percent in October to 4.45 million existing homes for sale, a
10.8 month supply at the current sales pace.
The sales pace was the lowest since the realty trade group began tracking both single-family and condo sales jointly in 1999.
Economists polled by Reuters were expecting home resales to fall to a 5.00 million-unit pace from the 5.04 million-unit rate initially reported for September. The September sales pace
was revised to a 5.03 million unit rate.
Lawrence Yun, the NAR chief economist, blamed the poor home selling market on a continuing credit crunch and failing subprime loans that were offered to borrowers despite their
"The subprime market has essentially disappeared," he said.