Friday, February 4, 2011

NEW CONSTRUCTION: Sales of New Homes Reached a 47-Year Low in 2010

WASHINGTON (AP) — Buyers bought the fewest new homes last year in records going back 47 years, the Commerce Department said Wednesday.

Sales for all of 2010 were 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the department said. It was the fifth consecutive year that sales declined after reaching record highs for the five previous years, when the housing market was booming.

The year ended on a stronger note. Buyers purchased new homes at a seasonally adjusted annual rate of 329,000 units in December, a 17.5 percent increase from the rate in November.

Still, economists say it could be years before sales rise to a healthy rate of 600,000 a year.

“The percentage rise in sales looks impressive,” said Ian C. Shepherdson, chief United States economist at High Frequency Economics, but even a large percentage “of next to nothing is still next to nothing.” He added, “New-home sales are bouncing around the bottom, and we see no clear upward trend in the data yet.”

Builders of new homes are struggling to compete in markets saturated with foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases.

Home prices fell in November in 19 of 20 major cities measured by the Standard & Poor’s/Case-Shiller index, according to a report released Tuesday, and nine of those cities fell to their lowest point since the housing bust.

Economists expect prices to keep falling through the first six months of this year.

Associated Press January 26, 2011

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