New home prices plunge, sales soar

[onehandle]

Source: CNN

Sharpest decline in price of new homes since 1970 spurs stronger than expected sales in April.

NEW YORK (CNNMoney.com) -- A big drop in the price of the typical new home sold in April spurred much better-than-expected sales, according to the latest government reading on the battered real estate and home building market released Thursday.

New homes sold at an annual pace of 981,000 in April, up 16.2 percent from the revised 844,000 pace in March. Economists surveyed by Briefing.com had forecast an 860,000 rate in April.

snip...

The median price of a new home sold in April plunged 10.9 percent from a year earlier to $229,100. The new price reading was also down 11.1 percent from the March reading.



Read more: http://money.cnn.com/2007/05/24/news/economy/new_home_sales/index.htm

[Demeter]

1. But There's NO Recession, No Sir!

[gravity]

24. The price of housing is lower, so it's good for the economy

It sucks if you are seller right now, but it's great if you are a buyer.

It would be like the price of oil going down, it's bad for big oil, but good for the consumer

[Tempest]

2. Who's buying?

Speculators? An unknown government program? Martians?

You'd never know it from my area. More and more houses are getting put on the market and none of them are selling.

[pimpbot]

9. Have you checked asking prices on those houses?

Many houses put up for sale recently are overpriced. Mostly because the person that bought the house paid too much and is trying to break even. A friend of mine is a real estate agent who had a client insist on a price, which was grossly over what comparable houses were selling for in the area. The house sat on the market for 60 days, client refused to listen.

Houses in the area (washington dc) sell fairly quickly if priced correctly. However "correctly" could mean lower than what someone paid a few years ago. I still believe a home is a good long term investment. The problem comes with these get rich quick people who unbalance the market by buying / selling multiple properties, none of which they own.

[Tempest]

20. Housing prices in CA are dropping rapidly

Some of houses are overpriced, but no where near when they were selling.

Some of the houses on sale are now reasonably priced. And they're still not selling.

[4dsc]

28. Some are over priced???

I recently visited my cousin in San Diego and she showed me her house she bought in 1996 for $127,000. Its now worth over $500,000!!! She's bought several other's, the same size for well over $500,000 and rents them out.. Overpriced?? You would catch me buying any of this property..

[Tempest]

29. Look outside of the big cities

Using San Diego, L.A. or S.F. is not a fair comparison.

Housing prices in Bakersfield, for example, have dropped much more than those areas.

[CK_John]

23. In my area only the banks showup at county repos sales. n/t

[pokercat999]

27. Same in my area speculators have overbuilt for the

last 4 years and are now paying the price.

[zonkers]

3. Does this negatively impact the "existing home" market? I would think so.

[sdfernando]

4. Wait for the revised April numbers

these revision are almost ALWAYS lower due to cancellations. Also, no mention of Y0Y numbers which is a much better comparison than month to month. Overall the housing market is still in deep doo doo.

[Gormy Cuss]

16. Yes. Month to month "surges" and "plunges" are not very useful indicators.

Year to year comparisons and 3 to 6 month trend data are more important, as is looking separately at the the new home market and the sales of existing homes.

[pimpbot]

5. Actually, this doesn't sound that bad of news

Prices are correcting from the inflated prices of a few years ago, and people are starting to buy again. Its good news if you're a potential buyer, as prices are down, and its good news if you're a seller, as it seems more people are looking to buy.

It isn't good news to people who bought at the peak of the inflated prices, as it will likely be 5+ years before they will see their house at the same value they bought at. Bad news for flippers, decent news for a long term purchase.

[ozone_man]

22. Except prices could be plunging and sales "soaring"

for the next 10 years. Maybe it will be a good time to buy then, but we may never see these prices for quite a while. Renting is the way to go for now.

[Donnachaidh]

6. I don't believe it

Sales soar? Do those figures include the real estate sharks out there gobbling up homes on the brink of foreclosure, due to shaky loans?

Yes, prices are plunging. But people are losing their homes because of predatory lending.

[Henryman]

13. How do you gobble up a foreclosed NEW home??? n/t

[Donnachaidh]

19. I meant overall sales

New homes are being built, but they are not moving at the rate they claim, at least not in my area. But there are certainly more sales in existing homes, and lots of those "we will bail you out of foreclosure" sharks circling in my area.

[depakid]

18. It's CNN- they'll say anything

As the poster above indicated, wait for the revised numbers from a credible source.

[smitty]

7. Wait a sec! The prices of houses fall and sales of houses

subsequently increase. Who'd think that would happen!

[nolabels]

That might have of also been a on purpose typo......

The soar could might of should of been SOUR

The reports i have been hearing is they are still down 10% below last year.

[LisaM]

8. Gee, a few more plunges and maybe I'll be able to buy

a house. I certainly couldn't afford one now, and really don't thank people who paid inflated prices for them the last few years, thereby pricing me out of the market.

[pimpbot]

10. Prices will continue to correct

Hopefully we will see less of these bogus loans so you wont see people paying way over market value for a house. I think that was one of the main reasons for what happened. Sure, lend someone $500k who makes $30k a year and they can pay a premium for a home... until they realize in a year or two theres no way they can afford the adjusted payment.

[LisaM]

11. I know; it's ridiculous. And where I live (Seattle) they haven't corrected yet

Though I do see houses staying on the market for a lot longer.

[David__77]

12. 1200 square foot condo for 270,000 here in Sacramento.

It would have been 340,000 a while back I imagine. I'm waiting for a larger drop. This market is slated for big declines as the local economic fundamentals cannot sustain the existing prices. People are being stubborn and pricing high but time will force the hands of some. Foreclosures are big as are short sales.

[AlCzervik]

14. 2 house on my street are for sale in Elk Grove, one is 2700sf, she started at

$470,000, it's down to $410,000 and i expect to sell somewhere in the $375,000 range, a year and half ago she bought it for $515,000. the other that is for sale actually went into foreclosure, they bought for $475,000 and couldn't make the pmts.

[David__77]

15. It was almost $200/square foot. Crazy.

Summer of 2005 was the peak. Due to a separation, I'm out of the housing market, but looking to get back in. I think patience is key right now, or else I'll end up in one of the ugly 1970-era fourplexes sprinkled around town.

[AlCzervik]

17. i agree, we haven't hit the bottom yet--but it's coming and i am so glad we never

borrowed from out house and that we go a regular plain old 15 year fixed. We paid $209,000 in 2000, we put a pool and a deck in for $25,000. we've made 2 improvements that we did when we had the cash to do them, the first was getting rid of the useless gas-logs in the fire place and putting in a really nice and efficient Vermont castings enclosed fireplace, out gas bill has been cut in half and the other things was plantation shutters this past fall, i'm hoping because of the r value we'll save on A/C bills this summer.

[diamidue]

26. Have you seen this site?

It contains a list of homes in the Sacramento area and gives photos and data on how far they have come down in price - and still no buyers.

http://flippersintrouble.blogspot.com/

[1932]

25. I think the sales up/prices down phenomenon reflects that sellers who were holding out finally

decided that prices aren't going to stay up there.

[seriousstan]

21. Fantastic news. As a landlord who is looking to expand my holdings, I welcome a correction.

There is money to be made in almost every move in any direction of the housing market.

[spinbaby]

30. Sales of existing homes are down

"WASHINGTON - Sales of existing homes fell by a larger-than-expected amount in April while the median price of a home sold during the month fell for a ninth straight month as the troubles in the subprime mortgage market acted as a further drag on housing."

http://news.yahoo.com/s/ap/20070525/ap_on_bi_go_ec_fi/economy

Builders are unloading their inventory at fire-sale prices so people are buying new houses instead of existing houses.

[roamer65]

31. I wouldn't touch a new home with a ten foot pole right now.

Even with a discount, it will likely be worth much less than the purchase price in the near future. This correction has only just begun.

[DU GrovelBot]

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[fedsron2us]

33. Contradicted by today's figures from the National Association of Realtors

http://www.realtor.org/press_room/news_releases/2007/ehs_apr07_lending_standards_affect.html

The excellent Bonddad Blog called bullshit on the US government report published yesterday and todays figures justify his scepticism

http://bonddad.blogspot.com/

Is this just another example of the tendency of the current administration to flood the media with 'unsound' economic data ? Perhaps they think they can 'buck the market'.