Wednesday, August 25, 2010

New Home Sales Fall 12.4% – Median Sales Price Down 7.6%

New home sales fell 12.4% in July to an annualized pace of 276,000 units. This follows a downwardly revised sales pace of 315,000 units in June (previously reported to be 330,000). Sales have been very volatile in recent months primarily due to the effects of the homebuyer tax credit which expired in April. Sales rose sharply in March and April as buyers rushed to take advantage of the credit. Following this rush, sales fell back to much lower levels. Housing activity has clearly slowed down over the past few months.

The median sales price has likewise been volatile. Prices fell 13.6% in April as homebuilders likely discounted prices in order to clear inventory before the credit ended. In May, prices jumped back up 16.2%. Since then, prices have continued to fall, dropping 7.6% in July. The median sales price was $201,600 in July, down 4.9% from a year earlier.

With the drop in sales, the months supply of inventory of homes for sale rose to 9.1 from 8.0. The historical norm is about 4.5 to 5 months. Before it can be certain the prices have stabilized, this ratio will likely have to find its way back to this area.

10.08.25 (Source: Census Bureau)

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