The new home market is in difficult shape due to credit issues. Existing home sales are often purchased by more credit-worthy borrowers and can be more broadly in areas where demand is more steady. The outlook for new home sales will remain poor for some time.New home sales declined 3.6% to 402,000 in September. The drop was completely unexpected as the consensus forecasted new home sales to increase 5.5% to 440,000 homes.
Inventories of already constructed new homes held steady at 7.5 months.
The median price actually rose from $199,900 in August to $204,800 and the average price increased a whopping 10.2% to $282,600.
47% of homes sold were less than $200,000 in September, down 2% from August.
he decline in sales is extremely disheartening. The first-time home buyer tax credit was expected to push up sales for homes through the end of November. We've seen the effects of the tax credit as existing home sales have surged.
There really isn't any specifics that would explain why the tax credit would not have helped new home sales. Reports from CNBC suggest that sales were down because new homes take a long time to build and buyers wouldn't be able to get their home closed before the November deadline. In this case buyers would not need to rush in and purchase a home.
Unfortunately it is not possible to determine how much of the supply of new homes is priced low enough to attract a first-time home buyer.
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