Home sales hit lowest rate in 10 years

Despite some construction firms’ attempt to halt the slide with massive price reductions, (several Vegas builders are taking as much as 20% off the cost of a new home,) the US housing market continued it’s slump, with used home sales reaching a 10 year low.

The price reductions on new homes are not, as yet, having an effect on exsisting home sales and it would appear another price adjustment is in order further down the chain before things start to move again. According to KB homes in Las Vegas, Sales contracts jumped 23% after KB cut list prices by $25,000 in May, one of the recent price breaks in the Huntington subdivision. But this is having a detrimental effect on used house sales. Buyers who purchased a year ago are now faced with the reality of seeing a brand new version of their home on offer at a considerable discount.

According to the Wall Street Journal:

Overall home resales declined to a 5.04 million annual rate, an 8.0% decrease from August’s downwardly revised 5.48 million annual pace, the National Association of Realtors said Wednesday.

The August existing-home sales level came in well below Wall Street expectations for a 5.25 million rate.

The 5.04 million pace is the lowest since the association started accounting for combined single family and condo sales in 1999. Based on single-family sales of 4.38 million, the September figures are the weakest since January 1998.

Inventories of homes rose 0.4% at the end of September to 4.40 million available for sale, which represented a 10.5-month supply at the current sales pace. There was a 9.6 month supply at the end of August, revised down from a previously estimated 10.0 months.

Existing-home sales tumbled in all regions. Sales dropped 7.0% in the Midwest, 10.0% in the Northeast, 9.9% in the West, and 6.0% in the South.

How long before a major price adjustment takes place? Building contractors are merely protecting them selves and disposing of difficult to move stocks at bargain basement prices rather than hang on through the traditionally slow Thanksgiving-to-January period. But when faced with the choice of a brand new build at 20% below the cost of an existing home, how hard is that decision to make?

We are holding our breaths.

Resources:

• The Wall Street Journal
• Wall street journal online
• Foreclosure advice
• Short sale alternative to foreclosure
• Financial Hurricane hits Florida
• GE Money home Lending pull out of the Florida market