Another monthly decline in new home sales has prompted a fresh round of worrying and despair over the U.S. housing market.
Sales of new homes in August fell for the fourth straight month to 295,000 units, according to the Commerce Department, a six month low and a pace that threatens to be the “worst year since the government began keeping records a half century ago,” from the Associated Press.
Last month’s 2.3 percent monthly sales drop was accompanied by a 9 percent decrease in the median new home price, which fell to $209,100, an 11-month low.
Media outlets and analysts are pretty dour about the indications of this data. For example:
- “The housing sector can’t get any worse,” said Michael Englund, an economist at Action Economics in Boulder, Colorado, as quoted in a Reuters article.
- “The [housing] market is dead, and even record-low mortgage rates are not doing anything to help,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics as quoted in the Wall Street Journal.
- “Sales are very weak, and there will be very little improvement over the next couple of months. We expect a step up in distressed home sales, which will put more downward pressure on prices. It’ll be a very slow return to normal,”said Celia Chen, a housing economist at Moody’s Analytics Inc. in West Chester, Pennsylvania as quoted in BusinessWeek.
- “Home prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s. It took 19 years for prices to fully recover after the Depression,” said a commenter from the Associated Press.
On the positive, home builders are at least responding to the falling demand appropriately. Total new home inventory in August also dropped to a record low.