New-home sales headed for record low in 2011

Sales inched up slightly in October, but it looks as if annual sales will be even lower than last year's tally, which was the smallest number sold in nearly 50 years.

By Teresa at MSN Real Estate Nov 28, 2011 12:11PM

© Seth Joel/Getty ImagesThe number of new homes sold inched up slightly in October, but builders aren't throwing any parties.

 

2011 is shaping up to be the worst year for the sale of new homes since the Commerce Department began keeping records in 1963, with sales below even last year's record low.

"It looks like 2011 will be another year the homebuilders would like to forget," Michael Larson, a housing analyst at Weiss Research in Jupiter, Fla., told Bloomberg. "Sales remain depressed, lending standards are tight, and pressure on pricing remains due to an ongoing influx of distressed used homes."


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Builders sold 1.3% more new single-family homes in October than they did in September. This October's sales were 8.9% above the number of sales in October 2010.

 

The rate of sales for October would yield total nationwide sales of 307,000 for the year. That's considerably fewer than the 323,000 homes sold last year, the lowest number in nearly 50 years and less than half the number sold in a healthy market.

The median sale price for a new single-family home was $212,300 in October, down 0.4% from September.

 

October's sales were the best since May, and builders put an optimistic face on the report.

 

"Today's report is right in line with our forecast for modest and gradual improvement in sales activity through the remainder of the year," David Crowe, chief economist for the National Association of Home Builders, said in a news release. "Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply."

The number of new homes for sale is at a record low, 162,000 nationwide, which is a 6.3-month supply at the current sales rate. Builders have kept inventory down as sales and prices have fallen, plus they have had trouble getting financing for new projects.

 

Here is how the building activity looked in October across the four U.S. regions:

  • Midwest: Sales up 22.2%.
  • West: Sales up 14.9%.
  • Northeast: Sales were unchanged.
  • South: Sales down 9.5%.
 
45Comments
Nov 29, 2011 1:41AM
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All comments are good and and most make sense.But the banks are making money on govt backed loans.I do not have the answer.This is going to take time but at least they could sell the forclosed homes for something and help neighborhoods improve,provide a home for someone.At least it will not or at least prevent it from total ruin.I work on these properties and see a lot of potential in most of them if they just would let them go.Looking for a busier 2012 in forclosures,the so called middle class is up next.
Nov 29, 2011 1:08AM
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No one in their right mind is going to build a home that isn't even worth what it cost to build it.
Nov 29, 2011 12:47AM
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Bronco Bronco.......  IF you think that is going to make it bad, wait till the banks FINALLY release the 2 million plus foreclosed homes that they are sitting on back into the market...... If anyone thought the last crash was bad, this next one will be even worse......
Nov 28, 2011 11:34PM
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If you think it is bad  now, just wait until mortgage interest rates begin to go up and the mortgage interest deduction is reduced or eliminated completely. 
Nov 28, 2011 9:31PM
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While the nation's largest banks were publicly reassuring nervous investors of their stability during the height of the financial crisis, they were also quietly approaching the Federal Reserve, hat in hand. The total price tag: $7.77 trillion, many times the amount of the better-known TARP bailout.

The magnitude of the government's assistance to struggling banks allowed them to grow even bigger and continue paying executives billions in compensation, toss in europe and  its now

16 trillion...wtf?  Thats your good 'ol boy  George Bush............ OWS was right all along...

 

go ahead read Bloombergs..

Nov 28, 2011 9:24PM
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they pay farmers not to farm.........
Nov 28, 2011 8:46PM
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2012 will be the double dip I predicted two years ago. Obama gave banks huge money package with no strings attached.. 2012 will be the year when the I M F chickens come home to roost. Do,t blame people buying stuff on credit for the mess we are in. Blame the unregulated derivatives market. Glad I blew my retirement money on sailboats, rum, and looose women.
Nov 28, 2011 8:46PM
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WHILE IT MAY BE TRUE THAT NEW HOME SALES SPUR THE ECONOMY MORE THAN EXISTING HOME SALES DO, NEW HOMES COST MORE THAN EXISTING HOMES.  SO AS LONG AS THERE

ARE CHEAPER EXISTING HOMES TO BUY AND BANKS KEEP FORECLOSING ON HOMES, THE

NEW HOME MARKET WILL ONLY BE AVAILABLE FOR THOSE IN BETTER THAN GOOD ECONOMIC CONDITION.

Nov 28, 2011 7:48PM
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Like most leveraged investments,owners must liquidate as soon as possible.

Banks fear losing the collateral.Real estate can still produce income,maybe not as much as needed to cover the principle,but enough to cover the interest until the prices stabilize or rise.

Nov 28, 2011 6:35PM
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They have made it so hard to get a loan it is wearing on the economy. Homes will continue to sit empty until banks start opening up loans for people. Instead you have to have a perfect credit score and in this economy, that is hard to do. Subprime loaning is what helped cause this. Loaning to people who did not make enough to cover the raises in their loans. If someone has a great income, take a dang chance and give them a loan. Quit nit picking people to death with your card fees and checking account fees and give out some loans jackwads!
Nov 28, 2011 6:33PM
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"Insurgetn" what a total joke you are.....once again a closet racist finds it easier to blame Obama than do a little reading and reflection.  It's everyones fault...greedy banks, investors, politicians, and consumers.  Paulson and Bush started the big trillion dollar bailout to the banks who did not even have individuals in their own organizations that could see this coming.  It's a tale of greed and corporate inbreeding where you could not blow the whistle on all of this for fear of losing your job and god knows what else......
Nov 28, 2011 6:00PM
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When it becomes more profitable to foreclose on a home and let it remain vacant while a family goes homeless then it is time for the people to realize that the powers that be are not acting in the interest of the citizens. When banks get trillions while the average person faces under employment, unemployment and increased financial hardship then it is evident that the powers that be are not acting in the best interest of the citizens. It seems as soon as we vote out the rotten apples, more rotten apples take their places.
Nov 28, 2011 5:48PM
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Good!

 

Things were totally out of control and people were spending way more than they could afford. It's about time we've come back to reality. Too bad it will take years for many people to get their feet back under them due to spending like there was no tomorrow.

 

Everyone complains about how bad things are. Things were much worse when we had run-away inflation on real-estate and run-away credit card spending. At least people now have some fear with the knowledge that money really doesn't grow on trees.

Nov 28, 2011 5:43PM
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More ultra conservative trolls and teabaggers blasting Obama again. They never shut up, and they never actually THINK!

 

Bush, the very rich, and greedy Wall Street tycoons are the ones who wrecked our economy. Obama inhereted this mess. Yeah, nothing he has done has fixed it. The reason? IT CAN'T BE FIXED!

 

It will take a lot of time, probably ten years, and good sound policy to fix this catastrophe.

 

The GOP and the Teabaggers don't have solutions that will help most Americans, their solutions will just make the rich even richer, turn the USA into a state of corporate feudalism with the wealthy as defacto nobility, and turn the American working class into wage-slaves/serfs.

 

The Occupy Wall Street people are the first signs of the resistance movement to this tyrrany by the rich. The OWS people have the right idea. More needs to be done. Check out "The Resistance JKL" for more information about how the American people are being systematically enslaved by the ultra rich.

Nov 28, 2011 5:42PM
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If builders quit building eventually all the homes will be bought up and demand will return to equilibrium. The banks can do what they want with the homes because they are loosing allot of money, but I don’t agree that tax payers should pay the bill for there losses. If you purchased a home and let it go you should be liable which means bad credit. Also, student debt should never be forgiven because you received the money, and students know this before taking on these types of loan. People need to take responsibility and become savers.  I just hope this country comes together before we financially rip our selves apart.

Nov 28, 2011 5:20PM
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They will never halt the foreclosures!!  These banks look at it through some dilluted mirage of making huge profits. They pass the foreclosed homes around playing hot potato to keep their books from taking too much of a hit. They just figure they can sell the property when the market finally comes back at a monsterous profit ( nevermind that in that time the home has probably fallen into disrepair)! I dont think you will see a banker coming out to do maintenance on a foreclosed property. My views may seem a little simplistic, but there is a grain of truth in it.
Nov 28, 2011 5:15PM
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      The numbers reflect how the economy has been affected by two wars, outsourcing, prices going up on food, transportation, health benefits and essentials.. its a stranglehold on people's income.. with no room for extras ( Vacation, College educations, Cars/Trucks etc.. ) a good start is shared sacrifice.. let the Bush tax cuts expire for everyone.. the wealthy, the middleclass -  pork, corporate welfare, capital gains, entitlements reform, let Government pay back the money it has taken over the years to Social Security (both sides) ..  We should show Europe and the World that the U.S.A is back.. we're kicking but and taking names. Oh, Buy American.. did i mention.. buy American.
Nov 28, 2011 4:47PM
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How about halting foreclosures? It is in the best interest of our communities to focus on modifying loans from arms to conventional or temporarily reducing required payments down to the equivalent of area rentals until homeowners get back on their feet. When my neighbors lose their homes, it leaves empty houses in the neighborhood that affects the safety of the remaining neighbors. Additionally, it drives down the value of my house while I diligently pay my mortgage every month on time. Finally, at an emotional level it sickens me to see neighbors that have lived in their homes for 25-29 years nearing the end of their mortgage terms lose their homes due to paperwork or sudden calls on their loans. They have been paying all these years and now near the end their is being taken away. Something smacks of unethical behavior here. These homeowners are typically in their 50-60s. If someone loses everything in their 20-30s, it will hurt, but they can rebuild. At 50-60, that is stripping their entire life away and they will struggle while realizing that they will not be able to gain it back. Is this what my generation has to look forward to (in my thirties)? Tossing seniors out of their family homes and out on the street.
Nov 28, 2011 4:40PM
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As I recall this all started going downhill in December 2007!  I don't believe Obama was President back then.  Although I have to say he hasn't done much to turn things around yet.  Congress as a whole hasn't helped much on anything either.  If they don't work together it doesn't seem like anything worthwhile will ever be accomplished!
Nov 28, 2011 4:25PM
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And which mega bank is sponsoring this report and article with a leading advertisement? It’s Bank of America, the company who’s Countrywide Mortgage Division is responsible for more foreclosures and distressed home sales than any other.

 

What a crazy world we live in. A little Twilight Zone music please.

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