December New Home Sales Fall Nearly 8%
Tweet
Share
E-mail
In a final blow to the weakest year on record, new home sales unexpectedly plummeted 7.6 percent in December.
The Commerce Department said December new home sales fell to a seasonally adjusted annual rate of 342,000 from the upwardly revised pace of 370,000 in November.
Economists had forecasted an annual rate of 370,000 for December.
November numbers were inflated due to the previous deadline for the first-time home buyer tax credit coming at the end of the month. Since the government extended the stimulus program until the end of April 2010, the rush to beat the deadline is not there for home buyers.
The lack of momentum in the housing market, is spurring concerns that the real estate recovery will completely crumble when the government backed incentives expire for good.
The drop in December was the worst since March 2009 when the housing market bottomed out making it clear that no interest rate hikes are on the foreseeable horizon. The Fed is being looked at to see if its strategy to keep rates at record lows will continue.
The Fed has bought $1.25 billion in mortgage-backed securities so far, but has iterated that it will begin phasing out the program by the end of March.
The number of new home sales in December was up 4 percent from the low of January 2009, but still 75 percent off the pace of July 2005.
The median price for new homes in December was up 5 percent to $221,300 from the month prior, but down 4 percent from the year-ago month.
Thus far, the recovery has needed hundreds of billions of dollars from taxpayers to make minimal headway. The true test for the housing turnaround will be in the months following the drop of government incentives.
The Commerce Department said December new home sales fell to a seasonally adjusted annual rate of 342,000 from the upwardly revised pace of 370,000 in November.
Economists had forecasted an annual rate of 370,000 for December.
November numbers were inflated due to the previous deadline for the first-time home buyer tax credit coming at the end of the month. Since the government extended the stimulus program until the end of April 2010, the rush to beat the deadline is not there for home buyers.
The lack of momentum in the housing market, is spurring concerns that the real estate recovery will completely crumble when the government backed incentives expire for good.
The drop in December was the worst since March 2009 when the housing market bottomed out making it clear that no interest rate hikes are on the foreseeable horizon. The Fed is being looked at to see if its strategy to keep rates at record lows will continue.
The Fed has bought $1.25 billion in mortgage-backed securities so far, but has iterated that it will begin phasing out the program by the end of March.
The number of new home sales in December was up 4 percent from the low of January 2009, but still 75 percent off the pace of July 2005.
The median price for new homes in December was up 5 percent to $221,300 from the month prior, but down 4 percent from the year-ago month.
Thus far, the recovery has needed hundreds of billions of dollars from taxpayers to make minimal headway. The true test for the housing turnaround will be in the months following the drop of government incentives.
You May Also Be Interested In
Create E-mail Alert Related Categories
Economic Data, General NewsRelated Entities
New Home SalesSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
