New Home Sales Hit 12-Year Low

Sales of new homes have plunged even more than expected to their lowest level in more than 12 years, leaving the market glutted with unsold homes and pointing to more trouble ahead for the battered housing market.

New home sales tumbled 9 percent in November to a seasonally adjusted annual rate of 647,000, according to a recent Census Bureau report.

That was the worst showing since April 1995, when the pace of sales was 621,000, and is much worse than the 715,000 sales pace forecast by economists surveyed by Briefing.com.

The sales pace is down more than a third from year-ago levels.  Furthermore, the decline is widespread nationwide, ranging from a 28 percent drop in the Northeast to a 38 percent plunge in the Midwest.

While new home sales make up only a fraction of the overall real estate market, this report is closely watched as a more leading indicator of market strength than the report on existing home sales.  The existing home sales report tracks existing home sales when they are closed, typically a month or two after a sales contract is signed.

Economists surveyed by Briefing.com forecast that existing home sales edged up to a 5 million annual sales rate in November from October’s 4.97 million, which was the weakest sales reading of existing homes on record despite the largest drop in prices.