Source : Straits Times - 28 Oct 2008
Sales of new homes in the United States recorded an unexpected increase last month as median home prices dropped to their lowest level in four years, the Commerce Department reported yesterday.
Sales of new single-family homes rose by 2.7per cent to a seasonally-adjusted annual rate of 464,000 homes, it said. Economists had expected sales to drop from the August level.
The median price of a new home sold last month fell by 9.1per cent from a year ago to US$218,400 (S$329,000) - the lowest price level since September2004 and a period when home prices were rising rapidly as the country experienced a five-year housing boom.
The surprising increase still left them 33.1per cent below the level of a year ago as the US is battered by the worst slump in housing in decades.
The report on a rise in new home sales follows news last week that sales of existing homes rose last month by 5.5per cent, the largest monthly gain in over five years.
Analysts are not convinced that the sales increases are signalling a bottom for the housing market. They note that last month’s gains came before the latest upheavals in the financial markets which have raised new worries about the overall state of the economy.
Many analysts believe the country has already entered a recession. They are forecasting significant increases in job losses which will make it even harder to mount a sustained rebound in housing.
New home sales fell by 21.4per cent in the north-east and were down 5.8per cent in the midwest. However, sales rose by a sharp 22.7per cent in the west, a region of the country which has seen some of the biggest declines in prices, a development which has spurred sales. Sales were up 0.7per cent in the south.
The rise in sales left a total of 394,000 unsold new homes on the market at the end of last month, down a record 25.4per cent from the number of unsold homes on the market at the end of September last year.
Builders have been sharply cutting back on production, trying to get inventories more in line with sales.
Even with the latest drop in total unsold new homes, the inventory represents a 10.4-month supply at the September sales pace, still a historically high level.
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