There was no way the November housing data was going to be good. There are too few people chasing too many homes. In some markets like Florida and Michigan, there are no people chasing too many homes.
Sales of new US homes fell 2.9% to 407,000. That is the lowest level since 1991.
The drop was slightly above the 400,000 pace expected by economists surveyed by MarketWatch.
Resales of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million. Resales are down 10.6% in the past year. Economists surveyed by MarketWatch had expected sales to fall to an annual rate of 4.9 million. In the past year the median sales price fell 13.2% — the largest decline since data collection began in 1968 and likely since the Great Depression — to $181,300.
There is every reason to think that these figures will not improve in December. Unemployment is rising. Although mortgage rates are well down from earlier this year, running 5.2% for 30-year fixed loans, the criteria for getting a new home loan are extremely tight. Banks can’t afford chances.
Default and foreclosure rates are still high, which will also keep downward pressure on prices.
Those looking for a silver lining won’t find it here.
Douglas A. McIntyre
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