By Allan Lengel
Washington Post Staff Writer
Saturday, December 29, 2007
New-home sales in November fell 9 percent from the previous month and were down 34 percent from a year earlier, more dismal figures for an industry facing bloated inventory, declining prices and mortgage woes.
"Things remain pretty weak," said Keith Gumbinger, vice president of HSH Associates, a financial publishing group in New Jersey. "We are still stumbling along in a rough patch. Inventory has to be cleared out."
The Commerce Department reported yesterday that sales of new single-family houses declined to a seasonally adjusted annual rate of 647,000 in November, compared with 711,000 in October and 987,000 in November 2006. It was the lowest sales rate since April 1995.
The median price of new houses in November was $239,100, up from $229,500 the month before but down from $240,100 a year earlier.
The Commerce Department reported a 9.3-month inventory of unsold new homes in November, up from 8.5 months in October. A six-month inventory is considered a desirable goal.
Industry experts gave little weight to the bump in the median price, saying the figure may not accurately reflect the ongoing price decline.
Gumbinger said he thought the price increase might be the result of builders offering fewer incentives to buyers in November.
"I don't think suddenly home prices are improving," Gumbinger said. "It's more likely some of the sales [incentives] did expire in November."
Ivy Zelman, chief executive of Zelman & Associates, a housing research firm in New York, was skeptical of the figures in general, saying the big picture is much worse.
"The data is masking the grim reality of today's housing market woes," she said, noting that the government's sales figures do not take into account contract cancellations. A number of builders have reported that buyers are backing out of sales contracts at high rates.
"Home prices are down from the peak, from 10 to 15 percent on average with many of the former hotbed markets down as much as 25 to 35 percent from the peak," she said.
Mike Larson, a housing analyst at Weiss Research in Jupiter, Fla., said builders are going to have to be more aggressive about dropping prices to "clear the inventory overhang and encourage buyers to step up to the plate. What they're doing so far isn't working."