New Home Sales Hit 17-Year Low

New home sales fell 5.3 percent in October to 433,000 — its lowest level in 17 years — the Commerce Department reported Wednesday. On a year-over-year basis, new home sales are down 40.1 percent from October 2007. Local views, although varied, reflect the dismal national picture: New home sales fell 6 percent in the South — the lowest level in 16 years — while falling 18 percent in the West — touching a low not seen since 1982. The inventory of unsold homes fell a record 8 percent in October. The median sales price on new homes fell 7 percent in the last year, coming in at $218,000 in October, according to the Commerce Department. Other industry analysts have echoed this continued dive in home prices. Various data released recently shows a general decline in home prices in the last several months. According to the S&P/Case-Shiller home prices indices, released Tuesday morning, prices in 20 key metropolitan areas fell 18.6 percent during September, while a 10-city composite index registered an annual decline of 17.4 percent. A separate national home prices index covering all nine census divisions found a record 16.6 percent decline in the third quarter of 2008, versus the third quarter of 2007, Standard & Poor’s said in a statement. New homes are not alone in these trends. Existing-home sales also fell in October, dropping 3.1 percent to 4.98 million units, according to a report released Monday by the National Association of Realtors. The national median existing home price for all housing types was $183,300 in October, down 11.3 percent from a year ago when the median was $206,700, according to the NAR’s press statement regarding the report. The slip in home price was affected by “a large number of distress sales at discounted prices.” NAR economists attributed the decline in existing home sales to consumer hesitance in the face of economic hardships. But hesitation in spending was not limited to large purchases like homeownership. The Commerce Department also announced Wednesday that consumer spending dropped 1 percent in October, reflecting broad concerns over the economy and a general tightening of the American budget. It also has created concern for a retail industry pinning a dwindling amount of hope on the upcoming holiday spending season. Read the new home sales report. Write to Diana Golobay at diana.golobay@housingwire.com.