WASHINGTON, Dec. 28, 2007
New Home Sales Plunged In November
9 Percent Drop Was Worst Showing Since April 1995, Commerce Department Reports
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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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The Commerce Department reported Friday that new-home sales tumbled by 9 percent 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 percent, to a pace of 715,000.
The median sales price of a new home dipped to $239,100 in November. That is 0.4 percent 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 country, except for the West, where they rose.
New-home sales dropped by 19.3 percent in the Northeast. They plunged by 27.6 percent in the Midwest and they fell by 6.4 percent in the South. However, sales increased by 4 percent in the West.
Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, 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 couldn't 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.
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, it has given Democrats and Republicans politicians- including those who want to be the next president - plenty of opportunities to spread blame around.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January.
The economy's growth is expected to have slowed to a pace of just 1.5 percent or less in the October-to-December. Analysts believe that the housing and credit troubles will force consumers and businesses to tighten the belts, causing the economy to lose considerable speed. The housing slump has been a drag on overall economic activity, lopping more than a full percentage point off growth during the summer alone.
© MMVII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 43 CommentsThe real jobs left and the jobless became mortgage brokers, scammers, payday lenders, bill collectors. It''s sad and pathetic for sure.
will keep buyers in the game for a few months more then we will see a new wave of defalts and bargen prices. You CAN lose money on real estate. Time to buy will be next summer after the spring sales of existing homes fizzels.
A few more years of 30 to 40% price drops should create the buying opportunity of a lifetime.
Trying to add insult to injury.
No thanks, I hope you and your real estate buddies end up on the unemployment line. You real estate brokers and agents are nothing more than used car saleman with a different suit jacket - Rip off man.
...............
You brought up a segment of the housing crisis that many seem to forget... the builders.
The big national home builders, most with offices on the East Coast, over built in many areas, especially the West. The Las Vegas market began to fall prior to the bubble bursting, primarily due to a glut of housing inventory. And housing inventory, in the end, is what will keep the market down overall. That applies to the very basic concept of economics: "supply versus demand".
But there are so many entities who are responsible for the housing/mortgage crisis, and they are the following:
Unscrupulous and greedy...
- builders
- lenders/banks
- buyers
- investors
- Realtors
All of those groups have a hand in this housing/mortgage crisis, but it is the home owners/buyers and Realtors who will suffer the most during this crisis.
Sadly, all of America will suffer from this crisis as many economic experts predict that it will cause a recession for 2008 and possibly 2009. Even those who were responsible buyers/home owners will suffer in a recession!
http://www.realtor.org/Research.nsf/files/EHSreport.pdf/$FILE/EHSreport.pdf
Nearly the same, if not identical writing and thought pattern.
Hmmm.
Its that, or there are far more abstractionists on the CBSnews.com site than I thought.
WC
The idiots who bought a $95,000 house for $175,000 and with a somewhat obscured (future) interest rate changes... and wonder why they can''t sell it for a half million today.
Then there are the other idiots who thought that the $250,000 house with two bedrooms and three baths was a bargain... even though they worked part time at Wendy''s.
And most of all the greedy sonzabitdges that sucker''d all these kind of folks into the deal...
Yeah.... this whole housing failure thing was expected, at least by yours truly.
Why is it that folks Do Not Pay Attention To The Details ?
Idiots.... all of ''em... they got what they deserve.
So mote it be.
WC
The idiots who bought a $95,000 house for $175,000 and somewhat obscured (future) interest rate changes...
Then there are the other idiots who thought that the $250,000 house with two bedrooms and three baths was a bargain... even though they worked part time at Wendy''s...
And most of all the greedy sonzabitdges that sucker''d all these kind of folks into the deal...
Yeah.... this whole housing thing was expected.
Why is it that folks Do Not Pay Attention To The Details ?
Idiots.... all of ''em
WC
Now those same folks are back out on their A$$ again!
Two big economic lessons in the past decade were given to the American people in a very harsh way... which was:
A huge economic boom can be considered as a "bubble" and with any bubble, it will eventually burst. So it is best NOT to over invest into that bubble! Always diversify your investments.
Now the question is... how many Americans (over the past 10 years) paid attention?
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