New-Home Sales Up in November, But 2011 Figures Dismal

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new-home sales up in november, but 2011 figures dismalWASHINGTON (AP) - Americans bought slightly more new homes in November, but 2011 will likely end up as the worst year for sales in history.

The Commerce Department says new-home sales rose 1.6 percent last month to a seasonally adjusted annual rate of 315,000. That's less than half the 700,000 new homes that economists say should be sold to sustain a healthy housing market.

It's also below the 323,000 homes sold last year - the worst year for sales on records dating back to 1963. December would have to produce its best monthly sales total in four years for 2011 to finish ahead of last year's total.

New homes account for less than 10 percent of the housing market. But they have a big impact on the economy. Each new home built creates roughly three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Economists note that housing is a long way from fully recovering and that many people are opting to rent because they can't afford to buy or don't feel a home is a wise investment right now.

Home construction has begun a gradual comeback and should add to economic growth in 2011. But the main reason for that increase is that the rate of apartment construction is nearly twice as fast as it was two years ago. Single-family-home construction remains depressed.

"New-home sales only capture one-family homes sold, and the recent pick-up in multifamily construction does not feed into these numbers," said Yelena Shulyatyeva, an analyst at BNP Paribas.

Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper re-sale homes. In November, builders slashed prices to their lowest levels in more than a year. The median sales price of a new home dropped nearly 4 percent last month to $214,100.

The market for new single-family homes has all but disappeared over the past year. Nationwide, just 158,000 such homes are now for sale, an all-time low.

The job market is improving but remains weak, and unemployment is still high at 8.6 percent. Some people who want to buy can't qualify for a loan or make the higher down payments that banks are demanding.

Even so, rising interest from potential buyers left U.S. homebuilders slightly less pessimistic about the housing market in December, according to the National Association of Home Builders/Wells Fargo builder sentiment index. It rose 2 points this month, reaching its highest level since May 2010.

Yet sales are slumping even though mortgage rates have fallen to record lows. This week, the average rate on a 30-year fixed home loan dropped to 3.91 percent, the lowest rate ever, mortgage buyer Freddie Mac said Thursday.

In selling new homes, builders must compete with foreclosures and short sales - when lenders accept less for a house than what is owed on the mortgage.

Sales of previously owned homes are also dismal. They rose slightly last month to a seasonally adjusted annual rate of 4.42 million units, the National Association of Realtors said this week. That's below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of 2008's revised totals, which were the worst in 13 years.

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captmerit

its over

December 27 2011 at 9:59 AM Report abuse -1 rate up rate down Reply
cpo1514

Well... seems that Joe Bite me's year(s) of recovery are an exaggeration? Time for the Occupant of the White House to resign immediately.... we cannot afford to be an even poorer nation.

December 26 2011 at 11:05 AM Report abuse +2 rate up rate down Reply
kngathr

1. Stop all NEW house building for at least 1 year 2. tear down 1-in-20 foreclosures to reduce inventory 3. mandate ALL mortgages are refinanced at lower levels(not just ones under water) 4. make the accounting work for banks so ALL foreclosures would show on books AND they could reduce slightly their capital ratios by doing THE GOAL would be truth in where we are, reducing the glut of homes currently out there(which will only get worse as boomers retire as well), stop the HUGE slide in home prices(taking more pressure off people underwater or not), turn construction jobs into DEstruction jobs for awhile, and put a solid reality-based floor into 17% of our economy- since until that happens NOTHING can improve and confidence willl only be negatively impacted. More ideas at FixTheNation.com

December 26 2011 at 8:22 AM Report abuse -1 rate up rate down Reply
1 reply to kngathr's comment
cpo1514

Stop all new building for a year.... that what Obama did already.... need even less.. maybe lay off more workers and hire more from the Acorn rolls??

December 26 2011 at 11:06 AM Report abuse +2 rate up rate down Reply
marine1942

Prices of homes down again unemployment is up, America 's credit rating down, factories moving overseas--- how could anyone (except Flea Baggers) vote for Obama ???

December 24 2011 at 4:44 PM Report abuse +5 rate up rate down Reply
mikeselen

2012 will be worst. Banks backlog is stagering. My rental has been in foreclosure for 4 years. Owner gets rent, bank nothing but must pay $9K in taxes and $2K insurance every year. BOA are criminals. Still a minimum of 6 months away. How can anyone be so stupid??????????????

December 24 2011 at 12:26 PM Report abuse +3 rate up rate down Reply
1 reply to mikeselen's comment
cpo1514

Obama voters can be even more stupid in 2012.... they are the uneducated led by the uninformed.....

December 26 2011 at 11:08 AM Report abuse +2 rate up rate down Reply
groininjurybad

Hey Barry >>>>>>>>>>>>>>>>>>>>>>>mIm

December 23 2011 at 6:01 PM Report abuse +2 rate up rate down Reply
groininjurybad

No Jobs No Buy house ~~~!!!

December 23 2011 at 6:00 PM Report abuse +4 rate up rate down Reply