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Sales of New Homes Plunge to Lowest in 17 Years

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By : Cassiano Travareli    99 or more times read
Based on a report released by the US Census Bureau, new home sales activity has fallen to record levels last August. Annual rate dropped by 11.5 percent from 520,000 to 460,000 compared to last July and by 34.5 percent from last year of the same period. This rate also marked the lowest pace in 17 years.

On the other hand, there were only 39,000 homes in July, which is also the lowest since 1991. Sales pace fell by 66.9 percent from 1.39 million homes recorded last July 2005.

According to an analyst, dealing with the sluggish new homes sales activity might extend until 2010 especially since the country is in the brink of a recession.

Median home price for new homes in August dropped by 5.5 percent - to $221,900 from $234,000 last July. Compared to last year, median home prices dropped by 6.2 percent from $236,500. If you check out the new homes for sale in the market today, you will notice that their prices are at the lowest since 2004.

With most of the builders shouldering the closing costs of the buyers and offering incentives just to keep sales activity positive, it is difficult to assess how weak the market really is.

As for the inventory, there are approximately 405,000 new homes in the market, with about 166,000 newly completed homes accounting for the month of July alone. This the largest inventory since 2004.

For the Census Bureau, the report should not be considered as really bad news since the inventory is actually falling, although it is not as fast as everyone hopes. In fact, it took just almost 4 months to sell 404,000 homes as evidenced four years ago.

In addition, the government is trying very hard to address the foreclosure crisis that will somehow lessen the impact on new homes sales activity.
Cassiano Travareli has been educated in the finer points of the foreclosures market over 5 years.

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