Sales of new homes for single families fell in October by up to 8.1% compared to sales in the same period last year. Analysts expect prices to further drop in the coming months.
It is one piece of news that could be interpreted as bearish by the market,
but it could be good news to opportunistic property investors and buyers. Sales of new homes (single-family) fell anew in October. The figure dropped 8.1% to an annualized rate of about 283,000 units, according to data released by the US Commerce Department.
The agency noted that it was the fourth month sales of new homes fell in the last six months. In comparison, October sales was just 2.9% higher than the sale in August, which was at 275,000 units, the lowest recorded since 1963
Market analysts assert that the figure supports their earlier expectation that it may take up to three years before the industry rebounds to healthy levels. Experts also noted that up to 600,000 new single-family homes should be actually sold in a month before home sales could be declared ‘normal’ again
Meanwhile, median home price in October also fell to its lowest point in about seven years. The median price of new home sold in the month dropped to $194,900, the lowest since October 2003
The Commerce Department’s housing figures came after a report was released earlier in the week that sales of existing or previously occupied homes also fell in October by 2.2% to 4.43 million units. The peak of sales of such homes was achieved in September 2005, when actual sales reached 7.25 million units.
Several market analysts downplayed this drop in monthly new-home sales. They say that the housing market could be vulnerable enough to higher volatility. According to them, sales indicate that it would be far from recovery, but it is also unlikely to drop further
The decline in home sales is usually attributed to several factors. Those include higher unemployment rate, uncertainty in house prices, and stricter bank lending requirements. The expiration in April of government tax credits to home purchases is also seen as a significant factor in home price declines
Economists reminded that weaker home sales could mean fewer jobs offered in the construction industry. However, it could be a piece of good news to some, particularly home buyers and investors who take advantage of lower price tags when purchasing properties
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