sharp rise in new-home sales as prices fall - nytimes€¦ · 28/7/2009 · sharp price drops...
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New-Home Sales Jump as Prices Fall Sharply
Jonathan Alcorn/Bloomberg News
Sales of new homes fell 10 percent in the West. The Sandoval family looked at this home in the Venice section of LosAngeles.
By JACK HEALYPublished: July 27, 2009
Sales of new homes in the United States posted their largest monthlygain in nearly eight years in June, the government reported onMonday, a sign that the housing market is bottoming as buyers takeadvantage of lower prices.
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Sharp Rise in New-Home Sales as Prices Fall - NYTimes.com http://www.nytimes.com/2009/07/28/business/economy/28econ...
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The Commerce Department reported that sales of newsingle-family homes rose 11 percent in June; economists’expected a 3 percent increase.
The pace of home sales rose to a seasonally adjusted rateof 384,000 a year, the highest level since November.
But the figures offered no sign that the housing markethad returned to health.
Despite the monthly increase, sales of new homes werestill down 21 percent from June 2008. The market is stillswamped by a glut of for-sale houses. And new homes,facing competition from cheap foreclosures, are sitting onthe market for close to a year before they sell, comparedwith a median time of six months on the market in 2007.
“These are still really bad numbers,” an economist at IHSGlobal Insight, Patrick Newport, said. “The market justcouldn’t have dropped much further.”
Compared with June 2008, sales of new homes fell 11percent in the Northeast, were down 10 percent in theWest and plunged more than a third in the South.New-home sales were up only in the Midwest, by 6percent.
As sales rose in June, median prices of new homes continued to fall, slipping to$206,200, from $232,100 a year ago.
The figures were the latest evidence that a three-year slump in the country’s housingmarket was leveling off as prices fell back and some builders and buyers began to steptentatively back into the market.
Earlier this month, the government reported that housing starts rose 3.6 percent in Junefrom a month earlier, and a trade group reported that sales of previously owned homesalso rose for another month.
“Sales are picking up a little,” a senior economist at 4Cast, David Sloan, said. “Whetherit’s going to pick up any momentum is really the key. I think we have to be doubtful aboutthat.”
Many economists expect prices to continue to slide, weighed down by heavy supplies,competition from distressed sellers and tepid demand from potential buyers.
“Prices will continue to edge lower at the bottom end of the market even as demand forthese homes picks up a bit,” Joshua Shapiro, chief United States economist at MFR,wrote in a research note. “And conditions remain brutal in the middle and upper rangesof the spectrum, with rising unemployment and prices that are still considerably too highin many markets being major impediments to gains in activity.”
On Tuesday, a closely watched measure of home prices will be released, offering somehints about whether the long plunge in housing values is abating. Economists areexpecting a 17.9 percent year-over-year decline in prices in the Standard & Poor’sCase-Shiller Home Price Index of 20 major metropolitan areas.
Although new-home sales have risen for three months, many economists worry thatrising unemployment, stagnant wages and continued tightness in lending markets willweigh down the housing market for the rest of the year.
“There’s still worries that the lack of employment growth and lack of wage growth is
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More Articles in Business »A version of this article appeared in print on July 28, 2009, on pageB8 of the New York edition.
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Sharp Rise in New-Home Sales as Prices Fall - NYTimes.com http://www.nytimes.com/2009/07/28/business/economy/28econ...
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