Sales of new homes have tanked

One economist crunches the numbers and says that pricey new homes simply aren't moving.

By Kim Peterson Aug 26, 2010 1:34PM
Home-buying guide © Ingram Publishing / SuperStockPop quiz: How many new homes priced over $750,000 sold in July?

The answer is zero -- for the second month in a row. At least, according to David Rosenberg, chief economist at investment firm Gluskin Sheff.

That figure seems hard to believe, but keep in mind that Rosenberg is talking about new homes, not existing ones. If he's right, that's a shocking statistic. For the housing market, trauma has set in, he says.

Things are unbelievably horrific in housing now, Rosenberg writes (as reported by Zero Hedge). Home sales have undercut recession lows by double digits, he writes, even though mortgage rates are at historic lows and there are at least eight government programs to encourage home buying.

It's hard not to feel outright panic after reading Rosenberg's report. Nearly 1 in four American homeowners are upside-down on their mortgage, and 5 million homeowners are in foreclosure or seriously delinquent, he writes.

There are 4 million homes on the market. The average price of a new home is down to $235,300 -- a low last seen in 2003. Expect prices to slide further.

"If the truth be told, if we are talking about reversing all the bubble appreciation that began a decade ago, then we are talking about another 15% downside from here," he writes. "The excess inventory data alone tell us that this has a realistic chance of occurring."

Luxury-home sales have simply crashed. Across the country, only 1,000 new homes above the $500,000 mark sold last month, Rosenberg writes. In fact, more than 80% of all new homes sold were under $300,000.

"Just another sign of how this remains a full-fledged buyers’ market," he adds.


3Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

105
105 rated 1
271
271 rated 2
420
420 rated 3
633
633 rated 4
492
492 rated 5
532
532 rated 6
725
725 rated 7
515
515 rated 8
343
343 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.