By Mark Huffman
ConsumerAffairs.com
January 29, 2009
While sales of existing homes rose in December, new home sales moved in the opposite direction. The U.S. Commerce Department reports new homes sold in December at an annual rate of 331,000 the lowest level on record.
That's down 45 percent from December 2007 sales. Economists, who generally predicted a higher sales total for last month, said the December results make a 2009 housing recovery much less likely.
With minuscule demand, home builders are adding to an already overloaded inventory of homes on the market. While buyers enjoy a huge selection to choose from, the competition among sellers is certain to put downward pressure on prices.
Amazingly, only 23,000 Americans bought new homes last month. At the same time, prices plunged. The median price of a new home was $206,500, down nearly 10 percent from December 2007.
For 2008 as a whole, new home sales were down 38 percent from the previous year. The median price was down seven percent, the largest one-year decline since 1970. Sales and prices were down the most in the northeast and the west.
Existing homes
The story was different for existing homes. More people bought existing homes in December and, on average, paid a lot less for them. Economists say lower prices probably had a lot to do with rising sales.
Sales of existing homes jumped a healthy 6.5 percent in December in a year-over-year comparison. But the National Association of Realtors reports the median home price plunged a record 15.3 percent, compared to December 2007.
"It appears some buyers are taking advantage of much lower home prices," said Lawrence Yun, NAR chief economist. "The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future."
Sellers might not view falling prices as a positive, but economists say it's these bargains that are producing the rising sales figures.
In another shot of good news, the NAR report shows total housing inventory at the end of December fell 11.7 percent to 3.68 million existing homes available for sale. That represents a 9.3-month supply2 at the current sales pace, down from a 11.2-month supply in November.
"We've added 25 million people to our population over the past decade and housing affordability conditions are the best we've seen since 1973, but household formation is much lower than expected," he said. "Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit.
"The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery," he said.
The national median existing-home price for all housing types was $175,400 in December, which is 15.3 percent below December 2007 when the median was $207,000.
Single-family home sales rose 7.0 percent to a seasonally adjusted annual rate of 4.26 million in December from a level of 3.98 million in November, but are 1.4 percent below a 4.32 million-unit pace in December 2007. For all of 2008, single-family sales fell 11.9 percent to 4,349,000.
The median existing single-family home price was $174,700 in December, down 14.8 percent from a year ago. For all of 2008, the single-family median was $197,100, which is 9.5 percent below 2007.
Existing condominium and co-op sales increased 2.1 percent to a seasonally adjusted annual rate of 480,000 units in December from 470,000 in November, but are 18.4 percent below the 588,000-unit level a year ago. For all of 2008, condo sales dropped 21.0 percent to 563,000 units.
The median existing condo price was $181,400 in December, down 18.3 percent from December 2007. For all of 2008, the median condo price was $210,000, which is 7.2 percent below 2007.
Regionally, existing-home sales in the Northeast slipped 1.4 percent to an annual pace of 720,000 in December, and are 14.3 percent below December 2007. The median price in the Northeast was $235,000, which is 7.8 percent lower than a year ago.
Existing-home sales in the Midwest increased 4.0 percent in December to a level of 1.04 million but are 10.3 percent below a year ago. The median price in the Midwest was $140,800, down 11.4 percent from December 2007.
In the South, existing-home sales rose 7.4 percent to an annual pace of 1.74 million in December, but are 11.2 percent lower than December 2007. The median price in the South was $158,600, which is down 8.0 percent from a year ago.
Existing-home sales in the West jumped 13.6 percent to an annual rate of 1.25 million in December and are 31.6 percent higher than a year ago. The median price in the West was $213,100, down 31.5 percent from December 2007.
