New Home Sales Down in November; Existing Home Sales Up
New Home Sales Drop to Lowest Level in Seven Months
While hopes were that new single-family home sales would have continued October’s upward trend, instead they plunged 11.3 percent, according to today’s U.S. Commerce Department report.
The seasonally adjusted rate for November was 355,000 new home sales—the lowest level since April, 2009. Forecasts had indicated a possible rise of 1.7%.
Strategists pointed at the expiration of the new homebuyer tax credit, which affects new home sales differently from existing home sales. Existing homes take longer to close; those sales are reported weeks or months after a contract is signed. Many economists consider new home sales, reported when the contract is signed, to be a more timely housing market indicator.
Still, existing home sales were higher than expected in November. The 7.4% increase led to the highest level since February, 2007. The rise is attributed to the homebuyer tax credit, along with lower prices and interest rates.
An estimated two million people have taken advantage of the tax credit, which helped lower existing home inventories during one of the worst economic environments since the Great Depression. 7.2 million jobs have been cut in the past two years.