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The housing market is schizophrenic. Yesterday, existing home sales surged to their highest level in nearly three years.
Today, the Commerce Department reported that new home sales plunged to a seven-month low. The drop was a whopping 11.3%, the biggest decline since January, to 355,000 units.
There is a bit of good news in that the median price of new homes rose by 3.8% to $217,400.
The supply of new homes on the market was at 7.9 months, up from 7.3 months in October. At this rate, it would take 7.9 months to sell all the houses that are available, assuming that no new houses are built.
It's difficult at best to figure out why there is such a discrepancy between existing and new home sales. One could guess that speculators are not willing to build new homes, worried about whether they will sell. Or they may not be able to get bank financing for spec houses. Then too, buyers may not be willing to go out on a limb, building a new home in these uncertain times.
Would you buy a house now?
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Reader Comments (Page 1 of 1)
12-23-2009 @ 7:47PM
william lindblad said...
Stats are contradictory and it one good reason that I continue to say that they are unreliable.
It's difficult at best to figure out why there is such a discrepancy between existing and new home sales.
The above is your line.
The reason is simple - value vs cost.
The cost of new construction went up with Andrew and again with Katrina. Yes, I know that sounds crazy but it is a fact. The fact is that the cost of the building materials increased. I am well aware that major storms only effect certain geographic areas but they cause shortages and demand in the aftermath which is probably the root cause for substantial price increase. However, the net result is when it gets to these levels - it tends to stay there. Therefore any builder that has to compete with a dwelling that is 20 years old as opposed to new is going to have to find novel ways to compete. On a financial basis it is smarter to look for an older property and sink money into updates. In nearly all cases the result is more s.f. for the dollar. If one has knowledge and is of the DIY mentality, better yet. Cost savings can be monumental, not to mention being able to purchase outright or having a much lower mortgage payment. As I mentioned in the previous blog of the housing nature - the proposed elements of the energy bill will further increase this disparity by making new construction even less competitive.
I bought a house in Nov. 08. Nuff said, check the financial conditions of time frame. Would I do it again? You bet.