U.S. New Home Sales Drop 8.5% in March

April 24, 2008
The March sales pace was the weakest since October 1991

Plunging to a 17-year low, sales of new U.S. homes fell 8.5%, despite hefty home price declines in response to a glut of unsold homes, Commerce Department figures showed April 24.

Last month's new home sales fell to a seasonally adjusted annual pace of 526,000 units, well below analysts' consensus forecast for a rate of 580,000. The March sales pace was the weakest since October 1991 and 36.6% below the March 2007 estimate of 830,000.

The median sales price of new houses sold in March was down 13.3% year-over-year at $227,60. That represents the largest 12-month decline since 1970, and leaves median home prices at their lowest point since September 2006.

The average sales price of a new home was $292,200, down 11.3% over the last year, a new record 12-month decline.

Builders cut 1.1% off the actual number of unsold homes to 468,000, but with the slowing sales rate they were left with an 11-month supply, the largest inventory overhang since an 11.3-month supply in September 1981. "Excess supply remains significant, suggesting that the downward adjustment will continue in the months ahead," said Marie-Pierre Ripert, analyst at Natixis. Ripert added that median prices are "likely to remain on their downward trend."

Sales of new homes in March fell in all regions of the country. The Northeast was hardest hit, with sales plummeting 19.4% to their lowest level since 1981. Sales in the Northeast have fallen a record 64.6% over the last 12 months. Sales fell 12.9% in the West and 12.5% in the Midwest, pushing sales down to levels not seen since 1991. In the South, sales dropped 4.6% to their lowest level since 1996.

Copyright Agence France-Presse, 2008

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