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Americans bought slightly more new homes in October, a hopeful sign for the troubled housing market. But the median sales price fell to its lowest level of the year, and the overall sales pace is trailing last year's — the worst in half a century.
The report suggests housing continues to drag on the U.S. economy and is a long way from recovering.
New-home sales increased 1.3 percent last month to a seasonally adjusted annual rate of 307,000, the Commerce Department said Monday. That's less than half the 700,000 that economists say must be sold to sustain a healthy housing market.
Last year's 323,000 new homes sold were the fewest since the government began keeping records in 1963. This year isn't faring much better.
While new homes sales represent a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
For many Americans, buying a home is too big a risk more than four years after the housing bubble burst.
Home prices have tumbled, the job market remains weak and unemployment has been stuck near 9 percent for more two years. Some people who want to buy can't qualify for a loan or make the higher down payments that banks are demanding.
Sales are slumping even though mortgage rates are hovering above historic lows.
Builders are struggling to compete with foreclosures and short sales — when lenders accept less for a house than the mortgage on the home — which are at an average discount of 20 percent. That has made many re-sales a bargain compared with new homes.
Yet sales of previously owned homes are also dismal. They rose slightly last month to a seasonally adjusted annual rate of 4.97 million units, the National Association of Realtors said last week. That's below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of last year's totals, which were the fewest since 1997.
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And this is good news?
Shhhhh. Be a good sheep, accept the headline, go bury yourself in debt and begin handing your money over to banks and the government.... it's a great "investment".
shhh....be a good sheep and pretend the sky is falling, that no one has a job, owns a home, or is buying one they can afford...whine, whine, whine...
Apparently, no strings were attached to these "loans," so the banks were able to pay HUGE bonuses to the very people who got into trouble in the first place. This is damning evidence of incompetence at best and more likely actually depicts high corruption. Everyone on the FED who had a hand in this should be fired on the spot. There is no excuse for this type of behavior. I fully agree that any bank (or company) that is considered too big to fail is also too big to exist. Break 'em up now! NOBODY IS THAT GOOD.
Never trust anything come out from "economists" of National Association of Realtors and Home Builders. House prices will continue to drop for many years. When the housing recovery comes, it will never be the same. No rush and start living within your means. You never want to spend the rest of your working life for the banks.
Home values are getting lower all the time and interest rates are too. Of course the sales are going to pick up. You can actually see the value of your house or others in your neighborhood online at This information is accurate, I verified it by looking up my house.