One of these months, new-home sales are going to show that Americans have decisively returned to buying newly built residences. Unfortunately, November was not that month: New-home sales rose a less-than-expected 5.5% to a 290,000-unit annual rate, the U.S. Commerce Department announced Thursday.

A Bloomberg survey had forecast that figure would rise to a 300,000 annual rate in November, after falling to a revised 275,000 pace in October -- down from initial estimates of 283,000. New-home sales hit an annual rate of 308,000 units in September and an all-time low of 274,000 in August.

There were two bright spots in November's report. First, the year-over-year decline lessened. New-home sales are now down 21.2% in the past year, compared to November 2009, an improvement from the 26.8% year-over-year decline recorded in October.

Second, inventory declined to an 8.2-month supply at the current sales pace in November, down from 8.6 months in October. However, that's still well above normal three- to five-month levels.

A Long Way From the Roaring 90s

November sales rose in two of four U.S. regions, jumping 5.8% in the Midwest and a whopping 37.3% in the West, but they plunged 26.7% in the Northeast and 13.2% in the South. The median home price in November was $213,000, up 9.2% from $194,900 in October.

Sales are down about 64% from the average 800,000-unit annual rate hit during the Roaring 90s, a period of strong U.S. GDP and job growth.

New homes are also selling about 74% below the average 1.1 million-unit annual rate recorded during the 2002 to 2007 housing bubble, but almost no economist expects the U.S. to return to that lofty, problematic-mortgage-fueled level, due to more modest gains in household formation, among other factors.

New-home sales did rise for the month, which is encouraging, given that November is a period when many builders taper activity due to the arrival of colder weather. But the gain was less than what economists were looking for. The nation will need adequate job growth of at least 125,000 to 150,000 new jobs per month to both reduce high new home inventories and give potential buyers confidence that their new residences won't decrease in value soon after they're bought.

Increase your money and finance knowledge from home

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum

4 Comments

Filter by:
donovansdanes

NEW home sales are up? I for one would like to know in what states, and in what price range. These two factors play a considerable roll in as far as the governing factors of how much consumers are spending on average for their NEWLY constructed home. And are these new homes sales statistics based on BRAND NEW single family dwellings, BRAND NEW semi detached/town homes, BRAND NEW condos? So, whats actually selling, where are the majority of these NEW CONSTRUCTION sales, N.S.E.W. And whats the average NEWLY CONSTRUCTED HOME selling price?

These articles need to have more concise factual information.

December 23 2010 at 5:51 PM Report abuse rate up rate down Reply
WILLS

Joe:

You are such a dyed-in-the-wool optimist that your bias reflects in your interpretation of data.

Second, inventory declined to an 8.2-month supply at the current sales pace in November, down from 8.6 months in October. However, that's still well above normal three- to five-month levels.


The above line is yours - what's wrong with it?

As I doubt that you have been sleeping it only shows that you have failed to take into account all of the mortgage notes that are now in legal limbo due to document procedure. We both know that this is an item that will be resolved within the next 3-4 months and thereafter, the flood gates will open again. So, inventory declines are temporary at best and nothing has changed. Further, in Spring there is another round of ARMS that are due to reset. If anything, the R.E. market has a long way to go just to get to a neutral state.

December 23 2010 at 12:22 PM Report abuse rate up rate down Reply