Tuesday, March 25, 2008

Western US Market Appears Strong in Light of New Home Sales Declines

It appears the sales of new homes did not follow existing homes as new home sales slide 1.8 percent in February. This is the fourth month in a row where new homes sales have declined and was slightly worse than expected. The sales pace of new homes is now at February 1995 levels.

As the median price of a new home fell to $244,100, down 2.7 percent year-over-year, experts predict the housing slump may last into 2009. New home inventory levels are at a 10 month supply, the highest in nearly 26 years. The housing market continues to be hurt by tighter lending markets, increase foreclosure rates, and tepid buyers afraid to enter the housing market for fear prices may fall further.

Interestingly, the largest declines were seen in the Northeast and Midwest. The West actually saw an increase of 0.7 percent. This includes poor performing areas such as Sacramento and Las Vegas. We continue to believe the strong markets in many parts of the San Francisco Bay Area continue to bolster housing in this area. There are many desirable areas which are at their lowest prices in years, and which may never see these prices again.

No comments:

Post a Comment