Sales of new homes off 26%

Sales of new homes nationwide dipped to a 12-year low in December, even as many residential builders were slashing prices to get the market moving again.

The Commerce Department reported yesterday that sales of new single-family homes fell 4.7 percent to an annual pace of 604,000, the slowest since February 1995, from 634,000 in November. For the year, sales dropped 26 percent from 2006's level, to 774,000 from 1.051 million - the biggest annual decline since 1963, when the recordkeeping began.

December's decline was likely even steeper, economists said, because the Commerce Department figures do not include sales cancellations during the month. The data have a margin of error of plus or minus 12.1 percent.

A record 495,000 new houses were for sale Dec. 31, a 9.6-month supply and only 1.4 percent less than in November, as many builders nationwide continued to slow construction and cut prices to reduce inventory and millions of dollars in associated costs.

The median sale price last month dropped 10 percent from December 2006, to $219,000 from $244,700, the Commerce Department said. For the year, prices rose just 0.2 percent, to $246,000.

Numbers for December and all of 2007 were not yet available for the seven counties surrounding Philadelphia, said Joseph Wadsworth of Hanley Wood Market Intelligence, which follows the local and national markets.

For the first 11 months of 2007, net new-home sales (minus cancellations) in the seven suburban counties fell just 11.3 percent from the January-November period in 2006, Wadsworth said. Average prices rose slightly, to $376,569 from 370,381, an increase of about 1.6 percent. (Hanley Wood began tracking sales within Philadelphia in August, so no comparisons with 2006 are available.)

The pace of sales may have fallen off, but newly built homes are still appealing to some buyers.

"I'm not one of those people who follows what the media and the public say," said Vera Germanotta, who, with her daughter, Maria, bought side-by-side units at Westrum Development Co.'s Villas of Packer Park in South Philadelphia, where prices range from the mid-$300,000s to the low $400,000s.

Germanotta, who is in her early 50s and has lived in Packer Park all her life, was looking for "new - something I wouldn't have to fix up." She and her daughter moved in three weeks ago.

If there's a new house you really want, you buy it, said Kathleen Czermanski, who has settled in at Wicklow, a development of eight $1 million-plus carriage houses in Wayne. She signed a contract in August 2006, long before the foundation was dug.

"I wanted to buy there when I first heard about it three or four years ago," said Czermanski, also in her 50s. "I wanted to live close to a downtown."

But her house in Malvern isn't selling, even though "I've reduced the price three times and put $30,000 more into it, even after [putting] a new kitchen and three bathrooms into it." Czermanski took out a swing loan in the meantime, yet "I don't regret buying the new house, not for a minute."

December's national drop was "disappointing in every way," said housing economist Patrick Newport, of Global Insight of Lexington, Mass. "Sales and prices were down, inventories were up, and the sales estimates for November were revised down," he said, to account for cancellations.

Many builders have lowered prices to get buyers off the fence. Cannon Custom Homes, for example, is offering $25,000 off its single-family houses at Traditions at Inniscrone in London Grove, which start in the upper-$200,000 range.

Other builders, however, aren't as eager to bargain.

"A potential buyer called with an offer of about $10,000 less than we were asking," said Perry Desiato, vice president of sales and marketing for McKee Builders, which focuses on the over-55 market. "I told them that we couldn't do it, because it wouldn't be fair to the other buyers who had paid the full price."