Thursday, December 23, 2004

New Home Sales Fall 12%, Largest Decline in 10 Years

New Home Sales Fall 12%, Largest Decline in 10 Years
December 23, 2004


By Jeff Bater. Smart Money
Dow Jones Newswires

WASHINGTON -- Demand for new homes took the biggest tumble in 10 years in November with record weakness in the Midwest.

New single-family home sales decreased 12% to a seasonally adjusted annual rate of 1.125 million, the Commerce Department said Thursday. It was the biggest drop since a 23.8% drop in January 1994.

Wall Street expected a much smaller decline for November. A Dow Jones Newswires-CNBC survey of economists had predicted sales would fall 0.7% to a 1.217 million annual rate.

October home sales rose 4.2% as the government raised the annual rate to 1.278 million from an earlier 1.226 million.

Average rates on 30-year mortgages have been below 6% since late July, according to Freddie Mac (FRE).

Commerce's report showed new-home demand down in three of four regions in the U.S. last month.

Sales fell 7.1% in the Northeast, tumbled 39.4% in the Midwest and were down 27.9% in the West. Sales climbed 13.6% in the South, where about half of overall U.S. activity took place.

The sales decline in the Midwest broke a record and the 27.9% decrease in the West was the sharpest fall since January 1982's 31.5%.

The inventory of homes on the market rose last month to a 4.5 months' supply from October's 3.9 months' supply.

Average and median home prices fell in November. The average price was $268,100, compared with a revised $282,900 in October. The median price was $206,300, down from a revised $224,700.

In November 2003 the average price was $268,300 and the median was $207,100.

An estimated 81,000 homes were actually sold last month, down from 99,000 in October, based on figures not seasonally adjusted.

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