By JEFF BATER
December 28, 2007 Wall Street Journal
WASHINGTON -- New-home sales retreated during November, sinking to the lowest annual rate in 12 years. Home prices also receded, a further negative sign for consumer spending and the economy.
Sales of single-family homes decreased by 9% last month to a seasonally adjusted annual rate of 647,000, the Commerce Department said Friday. October new-home sales rose 1.7% to an annual rate to 711,000; originally, the government said October sales rose by 1.7% to 728,000.
Economists had forecast a drop in November sales to an annual rate of 715,000. The actual rate of 647,000 reported for the month was the lowest recorded since 621,000 in April 1995.
Year over year, new-home sales were 34.4% lower than the level in November 2006. That's the largest year-to-year decline since 35.3% in January 1991.
The steep decline in demand for property is the flip side of a long ascent during the first half of the decade. Builders have responded by slowing groundbreakings. In the third quarter of this year, the housing slump reduced gross domestic product, the sum of U.S. economic activity, by more than a full percentage point.
While GDP surged at a sizzling 4.9% rate July through September, it is seen much weaker -- hampered by the housing correction and credit crunch -- in the current, fourth quarter, which ends Monday. The first estimate for fourth-quarter GDP will be released by the government Jan. 30.
An ominous sign for the economy is dropping home prices. Consumer spending makes up 70% of U.S. economic activity as measured by GDP. When consumers watch the value of their homes shrink, they tend to feel less wealthy, a mood that can act as a damper on spending plans and, in turn, slow economic growth.
The median price of a new home decreased by 0.4% to $239,100 in November from $240,100 in November 2006. The average price advanced by 0.5% to $293,300 from $291,800 a year earlier. In October this year, the median price was $229,500 and the average was $307,900.
The ratio of new houses for sale to houses sold rose during November, going to 9.3. It was 8.8 in October; originally, the government estimated the October ratio at 8.5. Friday's data showed an estimated 505,000 homes for sale at the end of November, down from October's 514,000.
Regionally last month, new-home sales decreased 6.4% in the South, 19.3% in the Northeast, and 27.6% in the Midwest. Sales rose 4% in the West.
An estimated 46,000 homes were actually sold in November, down from 55,000 in October, based on figures not seasonally adjusted.
December 28, 2007 Wall Street Journal
WASHINGTON -- New-home sales retreated during November, sinking to the lowest annual rate in 12 years. Home prices also receded, a further negative sign for consumer spending and the economy.
Sales of single-family homes decreased by 9% last month to a seasonally adjusted annual rate of 647,000, the Commerce Department said Friday. October new-home sales rose 1.7% to an annual rate to 711,000; originally, the government said October sales rose by 1.7% to 728,000.
Economists had forecast a drop in November sales to an annual rate of 715,000. The actual rate of 647,000 reported for the month was the lowest recorded since 621,000 in April 1995.
Year over year, new-home sales were 34.4% lower than the level in November 2006. That's the largest year-to-year decline since 35.3% in January 1991.
The steep decline in demand for property is the flip side of a long ascent during the first half of the decade. Builders have responded by slowing groundbreakings. In the third quarter of this year, the housing slump reduced gross domestic product, the sum of U.S. economic activity, by more than a full percentage point.
While GDP surged at a sizzling 4.9% rate July through September, it is seen much weaker -- hampered by the housing correction and credit crunch -- in the current, fourth quarter, which ends Monday. The first estimate for fourth-quarter GDP will be released by the government Jan. 30.
An ominous sign for the economy is dropping home prices. Consumer spending makes up 70% of U.S. economic activity as measured by GDP. When consumers watch the value of their homes shrink, they tend to feel less wealthy, a mood that can act as a damper on spending plans and, in turn, slow economic growth.
The median price of a new home decreased by 0.4% to $239,100 in November from $240,100 in November 2006. The average price advanced by 0.5% to $293,300 from $291,800 a year earlier. In October this year, the median price was $229,500 and the average was $307,900.
The ratio of new houses for sale to houses sold rose during November, going to 9.3. It was 8.8 in October; originally, the government estimated the October ratio at 8.5. Friday's data showed an estimated 505,000 homes for sale at the end of November, down from October's 514,000.
Regionally last month, new-home sales decreased 6.4% in the South, 19.3% in the Northeast, and 27.6% in the Midwest. Sales rose 4% in the West.
An estimated 46,000 homes were actually sold in November, down from 55,000 in October, based on figures not seasonally adjusted.
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