Home Sales and Prices Fall Sharply - New York Times

Home Sales and Prices Fall Sharply - New York Times:

September 28, 2007
Home Sales and Prices Fall Sharply
By MICHAEL M. GRYNBAUM
Sales of new homes plunged in August to their slowest pace in more than seven years as tighter credit and rising inventories continued to weigh down the housing industry. The grim statistics could foreshadow further economic weakness in the fourth quarter, analysts said.

New-home purchases fell to an annual pace of 795,000, an 8.3 percent decline from July, as the number of months needed to sell off builders’ inventories rose to the highest level since March, the Commerce Department reported yesterday.

The median price for a new home was down 7.5 percent from a year earlier, to $225,700, the steepest monthly price drop since December 1970.

The sales figures were released as KB Home, a large Los Angeles builder, reported a $35.6 million loss in its fiscal third quarter, or 46 cents a share, in contrast to a profit of $153.2 million, or $1.90 a share, in the period a year earlier. KB Home had a 32 percent drop in revenue, to $1.54 billion.

The latest data gave a fuller picture of the distress in housing-related industries, where the subprime mortgage crisis has led to turmoil in the broader credit market and to increases in foreclosures. On Tuesday, the National Association of Realtors reported a 4.3 percent drop in August in sales of existing homes, and another large home builder, Lennar, recorded the largest quarterly loss in its history.

Last month’s drop-off in new-home sales was focused primarily in the South and the West, areas particularly hurt by subprime-lending problems. The seasonally adjusted pace of new-home sales is now down more than 21 percent from last year." MORE