New USA home sales falling
Sales of new residential properties in the US plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away...
Purchases fell 10 per cent per cent to the lowest level since data began in 1963, the Commerce Department said. The median price decreased 13.5 per cent, the most in almost four decades.
The data shows that sales of new homes were down 48 per cent from January 2008 and the average price of a new home fell to £143,794.
Developers slashing prices is not enough as foreclosures drive down the value of existing homes further, making them comparatively more affordable.
'There is a risk that you continue to see foreclosures and you continue to have new inventory added to the market that prolongs the adjustment process,' said Zach Pandl, an economist at Nomura Securities International in New York.
Housing and Urban Development Secretary Shaun Donovan said that six million families in the US may face foreclosure if policy makers don't act faster to stem the housing decline.
The details of President Barack Obama's rescue bail out plan for the property sector are due to be announced on March the 4th.
Treasury Secretary Timothy Geithner has, however, pledged to move quickly to address the financial crisis and said a tax break of as much as £4,000 for first-time homebuyers should help the housing market.
'We remain committed to swift, efficient and effective implementation of plans to help the economy, the financial system and the housing market,' he Geithner said in a statement.
The number of new homes for sale at the end of the month fell 3.1 per cent to 342,000. The supply of homes at the current sales rate surged to a record 13.3 months' worth. The National Association of Realtors has said five-to-six months' supply is consistent with a stable market.
New home sales, which now make up less than 10per cent of the housing market, are considered a timelier indicator than existing sales because they are based on contract signings. Resales are compiled from closings and reflect contracts signed weeks or months earlier.
Toll Brothers, the largest US luxury homebuilder, said its first-quarter revenue plunged 51 per cent. 'The past five months have been among the most difficult in US economic history,' said Chief Executive Officer Robert Toll. Homebuyers are worried they may lose their jobs and won't be able to sell their existing homes, he added.
Source: www.propertywire.com