The conclusion of 2007 saw the biggest 12-month decline in new home sales in 37 years, and analysts predict 2008 to continue the residential sales slump.
According to the U.S. Department of Housing and Urban Development in conjunction with the U.S. Census Bureau, sales of new one-family houses in December 2007 were at a seasonally adjusted annual rate of 604,000, 40.7 percent below the December 2006 estimate of 1,019,000. The December 2007 rate also was 4.7 percent below the revised November 2007 rate of 634,000.
In December, the market appeared to be worsening. The government reported that the median sales price of new houses sold in 2007 was $246,900, already the worst since the 1991 housing downturn, yet the December median was just $219,300. The median price of new homes fell 10.4 percent from December to January 2008. It was the biggest 12-month decline since 1970.
The seasonally adjusted estimate of new houses for sale at the end of December was 495,000. At the current sales rate, the supply of new houses is 9.6 months.
According to Mark Zandi, chief economist at Moody’s Economy.com, the current slump could be the worst in the post-World War II era.
Overall, an estimated 774,000 new homes were sold in 2007. This is 26.4 percent below the 2006 figure of 1,051,000 and the biggest decline on record.
To see how the rest of the construction industry is faring, see Joseph M. Kelly’s “2008 Construction Outlook” in the January issue of ELECTRICAL CONTRACTOR or on www.ECmag.com.