New Home Sales Drop Again But Prices Fairly Stable

Sales of new single family houses dropped again in November according to a joint report issued Friday by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Single family homes sold at a seasonally adjusted annualized rate of 647,000 units. This is 9 percent below the revised October rate of 711,000 and 34.4 percent below the estimate of 987,000 for November one year ago.

Only in the West region were sales up from the previous month and then by a scant 4.0 percent. Sales in the Northeast were down 19.3 percent, in the Midwest 27.6 percent and in the South 6.4 percent.

And the inventory of unsold houses continues to mount. The report estimates that there were 505,000 new homes for sale at the end of November. This is a slight drop in the actual number of homes, 514,000, that were available at the end of October but the sales pace has slowed, resulting in a 9.3 month supply at the current absorption rate. In October there was an 8.8 months supply and in November, 2006 the inventory was sufficient for 6.5 months.

The median sales price for houses sold during November was $239,100, up from $229,500 in October which was the low point of the last 12 months. The average price, however, was down to $293,300 from $307,900. While the general trend in house prices is down, it certainly is not a precipitous drop. In fact the November 2006 and November 2007 figures are remarkably close. In November 2006 the mean price was $240,100 and the average was $291,800.

Over the last year the median has been as high as $262,600 (March) and the average has fluctuated from last November's low of $291,800 and $329,400 also in March. Builders, of course, are notorious for holding to their asking price while making other concessions to move the merchandise. There is no way to tell how many appliance upgrades or how much creative financing is lurking behind the median and average prices.

Houses had been on the market a median duration of 6.2 months by the time they sold in November. This is marketing time after completion. In October the median was 5.9 months and one year ago it was 4.1 months.

The National Association of Realtor's® report on the sales of existing homes is also due to be released in the next few days.