Wednesday, January 26, 2011

New-home sales end ugly year with Dec. gain

With all the news about how bad 2010 was for the housing market, the one thing that most of these articles did not include was data from December 2010 because it is difficult to get that data until about 30 days after the month ends. So now that December's data is coming out, it seems the last month of the year really helped salvage a pretty dreadful year.

Here is the article from USA Today with December's data.

By Martin Crutsinger, AP Economics Writer

Buyers purchased the fewest new homes last year on records going back 47 years. Sales for 2010 totaled 321,000, a drop of 14.4% from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs the five previous years, when the housing market was booming.

But 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% increase from November's pace. Still, economists say it could be years before sales rise to a healthy rate of 600,000 units a year." The percentage rise in sales looks impressive, but 10% of next-to-nothing is still next-to-nothing," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, referencing the December increase. "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 glutted by foreclosed homes. 

High unemployment and uncertainty over home prices have kept 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, and nine of those cities fell to their lowest point since the housing bust.

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

Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries.

On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Associated of Home Builders.

The median price of a new home rose to $241,500 in December, from a November median of $215,500. For all 2010, the median sale price was $221,900, up 2.4% from the 2009.

For December, sales rose in all parts of the country except the Northeast, which saw a 5% decline. Sales surged 71.9% in the West and were up 3.2% in the Midwest and 1.8% in the South.

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