New home sales take another dive in October
Sales of new homes remained weak in October, the latest sign the housing market is struggling to recover without government support for buyers.
The Commerce Department said Wednesday that sales of newly constructed dwellings stood at a seasonally adjusted annual rate of 283,000 units in October, down 8.1% from September and 28.5% below the October 2009 level.
The market for new homes has been weak since a tax credit for buyers expired in April.
Paul Dales, U.S. economist for Capital Economics, said the numbers were “close to awful.”
“The inevitable result of weak demand and high supply will be even lower prices,” Dales said. “We think that by the end of next year prices will be about 5% below current levels. That’s unlikely to derail the economic recovery, but it will certainly hold it back.”
The median new home sales price last month was $194,900, a 12.9% drop from September and an 8.2% decline from October 2009.
The seasonally adjusted estimate of new houses for sale at the end of October was 202,000, representing a supply of about eight months and two weeks. That compared to an estimated eight-month supply last month and close to seven months’ worth of supply in October 2009.
Sales declined 24% month-over-month in the West, 20.4% in the Midwest and 12.1% in the Northeast. Sales rose 3.1% in the South.
The read on the market for newly built homes follows a report Tuesday that sales of previously owned homes, which make up the bulk of the U.S. housing market, also weakened.
