Another data point in a long line of downward pressure. Santa Rosa real estate is not immune to national trends and this data on new homes is shocking. Annual new home sales of 331,000 with more than a year of inventory. Don't look for construction jobs to be back anytime soon.
The Commerce Department said Thursday that new home sales fell 14.7 percent in December to a seasonally adjusted annual rate of 331,000, from a downwardly revised November figure of 388,000.
December's sales pace was the lowest on records dating back to 1963. Economists surveyed by Thomson Reuters had expected sales would fall to a rate of 400,000 homes.
The inventory of unsold new homes stood at a seasonally adjusted 357,000 in December, down 10 percent from November. But at the current sales pace, it would take a more than a year to exhaust the stock as houses are dumped onto a market already glutted by a tide of foreclosures.
In many markets, sellers will face the toughest competition not from fellow homeowners but from banks and builders. Both will be willing to cut prices dramatically to sell a foreclosed or new home.
Go to Zillow.com to see how much nearby homes fetched recently. Once you've figured out what a buyer might pay, price your house 5% below that.
Sound painful? A recent study by a New Jersey appraiser found that houses priced below market ended up selling for more than similar houses listed above market. That's because lower prices attract more buyers.
The National Association of RealtorsPending Home Sales Index, based on contracts signed in November, dropped 4.0 percent to 82.3, the lowest level since the series started in 2001. That was worse than economists' expectations for a 0.1 percent drop.
"The housing market is always quiet at the turn of the year so what matters now is the performance through the spring, when activity usually rises," said Ian Shepherdson, chief U.S. economist at HFE in New York.
"With mortgage rates dropping sharply we are cautiously optimistic that sales will not fall much further and should even rebound a bit by mid-year. But the immediate outlook is bleak."