Complain about a product or service

New Home Sales Tumble In December

Sales fall 4.7 percent to lowest rate in nearly 13 years

By Mark Huffman
ConsumerAffairs.com

January 29, 2008

At the same time, median home prices were also lower, reflecting the drop reported in the median price of an existing home, reported last week by the National Association of Realtors.

The December new home numbers came in even lower than economists predicted. If home sold at the same rate as December for 12 months, the Commerce Department said, total nationwide sales would have amounted to only 604,000 units.

Those consumers who were in the market for a new home had plenty of bargains to choose from, meanwhile. The median sales price fell nearly 11 percent to $219,200 from the month before. And those bargains may be around for a while.

The government report shows there were nearly a half million new homes for sale at the end of December – a nearly 10 month supply.

The news follows last week's report that the U.S. housing market ended 2007 with another big decline in sales in December, capping one of the worst markets in a quarter century. The National Association of Realtors reports December sales dropped 2.2 percent to an annual rate of 4.89 million.

Mortgage applications jumped as homeowners rushed to refinance, hoping to lock in lower interest rates.

But falling home values are a major cause for concern for both Realtors and homeowners, as December saw a decline in the median price of a single family home. It was the first price decline since the 1960s.

"Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate," Lawrence Yun, NAR chief economist, said.

"Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.10 percent in December from 6.21 percent in November; the rate was 6.14 percent in December 2006.

Last week, Freddie Mac reported the 30-year fixed rate dropped to 5.69 percent.

"Although interest rates on jumbo loans have fallen somewhat, they remain well above conventional mortgage rates," Yun said. "It isn't surprising that the share of single-family homes selling for more than $500,000 fell to 12.4 percent of transactions in December from 14.2 percent a year ago."

Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in November.

"The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets," Yun said.

The national median existing-home price for all housing types was $208,400 in December, down 6.0 percent from a year earlier when the median was $221,600. But the Realtors said that because home sales have slowed the most in higher cost markets, there is a downward distortion to the national median as the mix of closed sales has changed over the past year.

For all of 2007, the median price was $218,900, down 1.4 percent from a median of $221,900 in 2006.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |