New-home sales set a record low
6-month period is worst in 50 years
WASHINGTON - The home-buying season was a bust.
Typically, March through August are the peak buying months. But Americans bought fewer new homes in that stretch than in any other six-month period since record-keeping began a half-century ago.
Sales of previously occupied homes did not fare much better. They nearly matched 2009’s total for the peak buying months. And that was the worst since 1997.
The figures underscore how badly the housing market is faring and suggest a recovery is years away.
Because the economy is barely growing and unemployment exceeds 9 percent, many people see a home purchase as too big a risk. Some worry about losing their jobs. Others can’t afford the 20 percent down payment most lenders now require.
Not even shrunken home prices and the lowest mortgage rates in six decades are convincing would-be buyers.
“The job engine has really sputtered out, and without jobs, Americans really can’t purchase homes,’’ said Celia Chen, a housing economist at Moody’s Analytics.
Plunging stock prices and renewed recession fears have led many economists to push back expectations for a housing recovery.
Chen expects prices to bottom at the start of 2012. She does not expect sales and prices to make a healthy recovery until 2015, at the earliest. In hard-hit areas such as California and Florida, it could take decades.
Pierre Ellis, an analyst at Decision Economics, said that until wages increase and hiring picks up, sales will languish.
Roughly 168,000 new homes were sold from March through August, the Commerce Department said yesterday. That’s fewer than the 180,000 for the same period last year - and last year’s sales were boosted by a temporary buyer’s tax credit. Over the same period in 2009, roughly 208,000 new homes were sold.
In a healthy six-month buying season, about 400,000 new homes would sell.
Among resales, about 2.8 million homes were sold from March through August, roughly as many as in the same periods in 2009 and 2010. In a healthy market, about 3.3 million would be sold in that six-month stretch.
Nationally, prices for previously occupied homes have sunk more than 5 percent over the past year to a median of $168,300. New-home prices have fallen further, by 7.7 percent to $209,100. That suggests sellers are slashing prices to compete with low-priced foreclosures and short sales.
Short sales occur when lenders allow homes to be sold for less than what’s owed on the mortgage.