Source : The Business Times, December 29, 2007
(WASHINGTON) Sales of new homes in the US plunged last month to their lowest level in more than 12 years, a grim testament to the problems plaguing the housing sector.
The Commerce Department yesterday reported that new home sales tumbled by 9 per cent in November from October to a seasonally adjusted annual rate of 647,000. That was the worst showing since April 1995, when the pace of sales was 621,000.
The sales pace for November was much weaker than economists were expecting. They were predicting sales in the weakest sector of the economy to drop by around 1.8 per cent, to a pace of 715,000.
The median sales price of a new home dipped to US$239,100 in November. That is 0.4 per cent lower than a year ago.
The median price is where half sell for more and half for less.
By region, sales fell in all parts of the US, except for the West, where they rose.
New home sales dropped by 19.3 per cent in the Northeast. They plunged by 27.6 per cent in the Midwest and they fell by 6.4 per cent in the South. However, sales increased by 4 per cent in the West.
Over the last 12 months, new home sales nationwide have tumbled by 34.4 per cent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.
That market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates which they could not afford.
With credit now harder to get to finance a home purchase, the problems in housing have grown worse. Unsold homes have piled up.
The problems are expected to persist well into next year. -- AP
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