Wednesday, July 6, 2011

NEW HOME SALES DROP AGAIN BUT NOT IN PRICE

Fewer people bought new homes last month, the latest sign that the struggling housing market won't rebound this year. 

New-home sales fell 2.1 percent in May to a seasonally adjusted annual rate of 319,000 homes. That's far below the 700,000 homes per year that economists say must be sold to sustain a healthy housing market. 


The median sales price rose 2.6 percent from April to $222,600. That's more than 30 percent higher than the median sales of price of older, re-sale homes. 

Housing remains the weakest part of the U.S. economy, analysts say. Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century. 

"You shouldn't expect much improvement in the single-family market in the next few months," said Patrick Newport, U.S. economist at IHS Global Insight. "These numbers are at rock-bottom by historical standards."

Though new homes represent only about 20 percent of the overall home market, they have an outsize impact on the economy. Each new home creates an average of three jobs and $90,000 in taxes.

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