According to the Economics and Statistics Administration:
"Sales of new single-family houses were at a seasonally adjusted annual rate of 330,000 in June, the second lowest on record after the revised 267,000 rate in May. June sales were 23.6 percent above the May rate, but 16.7 percent below their level a year ago."
"The median sales price of new houses sold in June 2010 was $213,400; the average sales price was $242,900. The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate."At the height of the market, new home builders were selling more than 1.5 million single family homes in a year. New home sales are tracking at about a fifth of that, an 80 percent drop! That's a real estate depression.
(On my radio show last week, I received a call from a woman who was complaining that we should do more to help real estate agents and builders. She wanted some sort of financial assistance to be given to them instead of using the cash to extend unemployment benefits through November. I pointed out to her that the government spent close to (or in excess of) $80 billion on home buyer tax credits. In her mind, the government should do more of the same, not provide any assistance to the unemployed-because then they'd have no incentive to find work-reduce the budget and keep the Bush tax credits in place.)
In the meantime, home builders are in a real pickle - they're unable to sell homes because:
- They're having trouble getting the cash to build from banks, which don't really want to lend out any more money to real estate developers;
- There are millions of nearly-new foreclosures competing with new home inventory, often in the same subdivision, undercutting the price (in some cases) by hundreds of thousands of dollars;
- There is a shadow inventory of homes that will be coming on the market, estimated to be as high as 7 million;
- Home buyers are trending down in their spending, going for smaller, cheaper homes or fixer-upper homes in fully-established neighborhoods, where they can build in value;
- home buyers are afraid to move into partially-finished developments, since they don't know if the developer will have the funds to complete the subdivision (see #1).
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.