Economic worries loomed over the new-home market in December, when the level of sales fell 14.7% compared to the previous month to land at a pace of 331,000 units, according to figures released by the U.S. Census Bureau today. Compared to December 2007, that represents a drop of 44.8% in new-home sales activity.
“Builders are finding it ever harder to sell new homes because existing home sales prices are dropping fast, and because the number of existing homes for sale remains near a record high,” said Patrick Newport, U.S. economist for IHS Global Insight in Lexington, Mass. “Indeed, the median time it took to sell a new home increased a tenth to 9.3 months, the highest reading since August 1982.”
That slow sales pace is also boosting the supply levels of new home inventory, which stood at uncomfortably high 12.9 months in December, despite a relatively reasonable number (357,000) of new-homes for sale during the period.
Price pressures and an abundant supply of homes forced prices down in December, with the median new-home price falling 6% to $206,500.
Overall, the Census Bureau estimates that builders sold 482,000 new homes last year, which is 37.8% fewer than they sold in 2007.
Alison Rice is senior editor, online, at BUILDER magazine.