U.S. New Homes Sales Drop 0.6% in May 2009

June 24, 2009 by · Leave a Comment
Filed under: Real Estate News 

The housing recovery in the U.S. will be prolonged and will most likely look like an “L” over time.   With job losses still mounting, an uncertain credit market and many unfunded liabilities our government has not addressed or reformed, we are likely to still see more price declines and foreclosures.  2009-2010, we will see more defaults as the “Alt-A”, “Option ARM” known as the “Pick and Pay” loans, start resetting to a much higher interest rate.  These new defaults will put continued downward pressure on home prices but there is a silver lining to this picture.  As prices do decline to a more normalized level (1.5-2.5 times the median income of a region), we should see homes sales pick-up as purchasing will be more affordable and comparable to renting minus taxes and maintenance.

News (Associated Press):

New U.S. home sales fell slightly last month, in another sign that the housing market’s recovery is likely to be gradual and prolonged.

The Commerce Department said Wednesday that sales dropped 0.6 percent in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000. Sales were down nearly 33 percent from May last year.

The results fell far short of economists’ forecast of a 360,000 sales pace, according to Thomson Reuters. However, many analysts think new home sales hit bottom in January and will increase gradually as the economy gathers steam.

The median sales price of $221,600 was up 4.2 percent from April, but down 3.4 percent from a year ago.

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