New Home Sales in West Drop 11.9%
New Home Sale
The Commerce Department reported today that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century.
Here in the West we saw sales fall 11.9% from December but they were up 13.8% from a year ago.
The drop in sales pushed the median sales price down to $203.500. That was down 5.6 percent from December’s median sales price of $215,600, and off 2.4 percent from year-ago prices.
New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record.
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Home prices do not double in price on average every ten years. There is no evidence to support such a statement. S&P case shriller home index which goes back to 1890 found that SFR prices went up at the rate of inflation over time. If they do double in any short period it’s called a asset bubble and values return to medium as the bubble implodes. OFHEO also shows long term prices run with inflation and return to normal price levels rather than continuing to rise. In order for RE to double every 10 years average income would also need to rise with it, which if you haven’t noticed doesn’t happen and when it does as during the 70’s yield on bonds jump into the teen’s and the FED pushes up interest rates causing home prices to decline.
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