New Home Sales Post Surprise Drop; Inventory Also Falls

Interesting report. It appears that the supply of housing inventory in the Franklin, Greenfield and Oak Creek areas are in line with the national trend of about 7.5 months. Oak Creek having a slightly smaller supply of about 6 months. The median home price for September in Franklin was $209,900, in Greenfield $172,000 with Oak Creek at $215,750. The average home sale price for the 3rd quarter for these communities was higher in Franklin and Oak Creek while it was pretty much the same as the median price in Greenfield.

Source: cnbc.com
Date: 28 October 2009
Link: http://www.cnbc.com/id/33506191

Sales of new U.S. homes unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery that businesses appeared to be banking on. New single-family home sales fell 3.6 percent to a 440,000 until annual pace from a downwardly revised 417,000 units in August, The Commerce Department said Wednesday. Analysts polled by Reuters had expected sales to rise to a 440,000 unit pace from August’s previously reported 429,000.

A separate report from the Mortgage Bankers Association on Wednesday showed demand for mortgages has fallen for the past three weeks as buyers move to the sidelines ahead of the Nov. 30 expiration of a popular home-buyers’ tax credit. The housing data represented a road bump in a recovery that otherwise appears to be widening. Another report from the Commerce Department showed that new orders for long-lasting U.S. manufactured goods rose 1 percent in September as business stepped-up investment plans.

“One month is obviously not a trend and I think there is plenty of evidence that things are turning around. I still believe the economy has hit bottom and is on the way up, but it will be a long, slow process,” said Mark Bonhard, an investment advisor at Dawson Wealth Management in Cleveland, Ohio. U.S. stock indexes extended losses when the data was released, while U.S. Treasury prices added to gains and the U.S. dollar rose against the euro. Despite the drop in sales, the number of new homes for sale at the end of the month shrank to its smallest in 27 years, leaving the supply of homes available at 7.5 months’ worth. The median sales price rose in September to $204,800 from $199,900, while the average sales price rose to $282,600 from $265,500.

The new home-buyer tax credit affected recent housing market trends, Cary Leahey, economist at Decision Economics in New York, said. The $8,000 credit, which expires on Nov. 30, helped lift the housing market from its deepest downturn since the Great Depression. U.S. lawmakers are considering extending it. “There are some distortions because of the new home-buyer tax credit, but we can say housing sales have bottomed,” Leahy said. “Some are afraid housing will fade in 2010. That will not happen unless the labor market fades or does not improve.”

The Mortgage Bankers Association said its mortgage applications index fell 12.3 percent to 562.3 in the week ended Oct. 23, with purchase applications the weakest since mid-May and refinancing requests at a two-month low. Eligible borrowers who applied last week would unlikely be able to close their loan by the scheduled Nov. 30 expiration of the tax credit, industry experts said.