New-Home Sales Are Lower Than Forecast; Prices Drop Most in Four Decades

[Purveyor]

Source: Bloomberg News

Nov. 29 (Bloomberg) -- Fewer new homes than forecast were sold in the U.S. in October even as prices dropped by the most in almost four decades, deepening the real estate slump that threatens to stall economic growth.

A total of 728,000 new houses were purchased at annual rate, compared with a median forecast of 750,000 of economists surveyed by Bloomberg News. The figure was up from a revised 716,000 pace in September that was the lowest in almost 12 years, the Commerce Department reported today in Washington.

The collapse in subprime lending and turmoil in financial markets are projected to extend the housing recession well into 2008. Some economists now forecast the world's biggest economy will grow this quarter at less than a fifth the previous three months' pace, prompting the Federal Reserve to lower rates.

``There is no question there has been another big leg down in housing in recent months,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who forecast sales would drop to a 725,000 pace. ``Prices will continue to slip.''

The median price of a new home dropped 13 percent, the most since 1970, to $217,800 in October from a year earlier.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=a8jNuw9Dnk6Y&refer=us

[ozone_man]

1. Bad time to flip a house.

Or, maybe it's a good time to get out from under it, while there is a chance, becasue we have a long way to go down still.

[JBoy]

2. Now that the value of everyone's house has plummeted

it's the perfect time to buy more shit on credit. Get shopping!

[Javaman]

3. Prices are down and sales are down. Not a good combo. nt

[roseBudd]

4. There isn't a corresponding population increase that justifys new home construction

A study last year showed that construction causes sprawl. And sprawl causes...

obesity

global warming

long commutes

dependence on foreign oil etc

[Emillereid]

5. I am so glad we sold our home in 2006 -- we saw this train wreck coming!

We took our equity and ran!