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New Home Sales Down 7.6% In December.

Posted on | February 2, 2010 |

According to this article from the AP, new home sales fell 7.6% last month.

The Commerce Department said December sales fell to a seasonally adjusted annual rate of 342,000 from an upwardly revised November pace of 370,000. Economists surveyed by Thomson Reuters had forecast a pace of 370,000 for December.

It’s mildly surprising given that the home buyer tax credit was still in effect at that time, but it could be due to a lag. It usually takes about 2-3 months to finalize the purchase of a home from the initial offer to the closing date and it could be that new home buyers at stopped looking by early November, when the tax credit was originally set to expire. If this is true, then we could expect to see a jump in new home sales in the January/February time frame.

I suspect the big reason however is that unemployment remains near historically high levels, and people simply don’t have or cannot plan to have the required, steady income needed to be able to afford a home.

The article never really mentions or even speculates about a reason for the ‘unexpected’ drop.

:-/

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