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New-Home Sales Hit All-Time Lows in 2011

New-home sales crawled to a seasonally adjusted annual rate of 307,000 in December despite modest signs of recovery.


The ""Commerce Department"":http://www.commerce.gov/ said Thursday that new-home sales fell 2.2 percent below expectations from November, which held that homebuyers would pick up a seasonally adjusted 314,000 homes annually.

New homes from last month carried a median sales price around $210,300, with the average sales price hovering around $266,000.

Last year marked the sale of just 302,000 new homes, reflecting a 6.2-percent decline from figures seen in 2010. A story in ""_The Washington Post_"":http://www.washingtonpost.com/business/economy/us-new-home-sales-fell-in-december-to-make-2011-worst-sales-year-in-history/2012/01/26/gIQANEUtSQ_story.html Thursday found that new-home sales plunged to their lowest in roughly half a century.

Experts said in past interviews with MReport that ebbing


unemployment and steady job growth ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô although helpful to the economic recovery and first-time homebuyers ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô fall flat on frequent contract failures, still-tight credit, and a slow pace for new home construction.

The ""National Association of Realtors"":http://www.realtor.org/ (NAR) said Wednesday that pending-home sales also slid back, deploying a forward-looking index that found contract signings on the decline by 3.5 percent in December.

""Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,"" ""Lawrence Yun"":http://www.realtor.org/research/chief_economist_bio, chief economist with NAR, said of the figures in a statement.

""Contract failures remain an issue, reported by one-third of Realtors over the past few months, but home buyers are not giving up,"" he added.

""Paul Diggle"":http://www.capitaleconomics.com/staff/property-economics/paul-diggle.html, a property economist with consultancy ""Capital Economics"":http://www.capitaleconomics.com/, chalked up lower-than-expected new-home sales in December to a continuing foreclosure glut and discounts from short sales.

""The bottom line is that new home sales are unlikely to rise significantly from their current ultra-low level while they are having to compete with deeply discounted foreclosures and short sales,"" he wrote in a note Thursday.

He said that a possible stabilization in home prices may be near, even while the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ reported Wednesday that prices declined by 1.8 percent year-over-year in November.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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