New Home Sales Rise, Median Sales Price Plunges

New home sales increased 1.7% in October from a downward-revised September figure, but median home prices fell sharply, the Commerce Department reported Thursday. October new home sales came in at an annual rate of 728,000, up from the downward-revised 716,000 in September, which was the lowest pace since January 1996. Economists were forecasting October sales would fall to 750,000 from a previously reported September rate of 770,000. "The overall picture is housing is still going to decline at least for the rest of this year," said Adam York, economic analyst at Wachovia Economics. "We would not be willing to call September the bottom." The median home price in October of $217,800 represented an 8.6% drop from the $238,400 price reported in September. At the current pace, it would 8.5 months to clear the new home inventory. "There is no question there has been another big leg down in housing in recent months," James O'Sullivan, senior UBS economist, said. "Prices will continue to slip." In a Q&A period after yesterday's speech, Fed Vice Chairman Donald Kohn said, "The housing sector has continued to decline and to erode at a very, very rapid rate. It would be nice to see some early signs that it was beginning to stabilize, and we haven't seen that yet."

Sources: Press release (.pdf), Reuters, Bloomberg
Commentary: Housing Market Tracker - Investment and Sentiment • Let's Get Some Perspective on Subprime
ETFs: SRS, SKF

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Comments

[Lee Carlson]

Predicting when home sales will rebound is like picking stocks and bonds that will increase. Home prices will stop dropping when the huge inventory is cut down to a reasonable size and that's going to take a while. A couple years at lest, I don't see those non - performing loans as having any real effect on sales of homes,...it just means that the idiot Mortgage brokers are going to have to start DOCUMENTING those loan applications. and banks are going to have to get serious about the fact that Banking is not a game it's a Business and meant to make a profit. It almost appears that Banks have made counting the number of loans the rule of the game but it's a foolish way to run a bank. I would rather that the banks get tough, and make people document their loans ! Lenders were very much part of the problem and I personally don't want to see taxpayer money bailing out people (lenders ) who didn't run their business professionally. LC