Home sales, prices continue declines

Sales of new homes fell 8.6 percent nationwide in December from the same month in 2008, the Commerce Department reported yesterday.

In addition, the nation's median home price declined 4 percent in December from a year earlier, to $221,300 from $229,600.

For all of 2009, new-home sales totaled just 374,000 units, 22.9 percent below the 485,000 sold in 2008, the Commerce Department said, and the lowest number since record-keeping began in 1963.

"The road to a housing recovery is proving to be a very bumpy ride," said Bob Jones, of Bloomfield Hills, Mich., chairman of the National Association of Home Builders.

Some economists say they believe that, as employment grows, sales will increase to 487,000 houses in 2010.

"On balance, though, the report was disappointing," said IHS Global Insight Inc. economist Patrick Newport. He quickly added that because the data are based on a small national sample, "most of the numbers are not significant."

Builders' unsold inventory rose from 7.6 months' worth to 8.1 - meaning that, at the current pace, it would take that long to sell homes already in the pipeline.

That is not so bad, Newport said, because the actual number of new houses for sale fell to 231,000, the 32d consecutive month of declines.

The markets for newly constructed and previously owned homes are usually considered in balance between buyers and sellers when there is a six-month inventory, said economist Kevin Gillen, of Philadelphia's Econsult Corp.

"It is not surprising that new-home sales tailed off in December, since many buyers were getting in to close" before the first tax credit expired Nov. 30, said Wayne Norris, regional sales director of Hanley Wood Market Intelligence, which tracks such sales. "Additional buyers did not feel the urgency to buy in December, as they now have until April to purchase and June to close. So why rush during the holidays?"

David Crowe, chief economist for the builders' group, said, "We are looking forward to the newly extended and expanded home-buyer tax credit [which expires April 30] beginning to have a positive impact on buyer demand going forward."

The current extension raises income limits and provides a $6,500 credit to buyers who have not purchased a home in five years or more. That has helped Granor Price Homes, of Horsham, said principal Marshal Granor.

Though December was slow, "our January has been completely a surprise," Granor said, with seven sales contracts at his RiverWalk project in Royersford, more than in fourth quarter 2009.

"We are seeing agents with marginally qualified buyers [a little light on savings or income, but excellent credit scores], and who don't want to miss out on the tax credit," Granor said. "That seems to be a prime motivator in the first-time buyer arena."