New-home sales remain mired near record low

PHILADELPHIA — Sales of newly constructed homes in August remained at their second-lowest level since 1963, for a second straight month, the Census Bureau reported Friday.

Sales were at an annual rate of 288,000 units, the same as the revised rate for July, and were 28.9 percent below the August 2009 level.

At that sales rate, it would take 8.6 months to sell off the current supply of new houses — 206,000, the lowest level since August 1968.

Some analysts had predicted a 5 percent increase in sales over July. Sales of previously owned houses nationwide rose 7.2 percent in August over July, but that was the lowest month in more than a decade and the numbers remained 19 percent below those of a year ago.

The national median price, $204,700, is the lowest in seven years, indicating that "all the bubble gains are gone," said economist Joel L. Naroff of Holland, Pa.

Although the data show increases in sales in the West and Northeast, Naroff said the level of demand was so low that small, absolute changes created large percentage changes, "so it is hard to figure out what really is going on across the nation."

Although the now-expired federal tax credit affected sales of existing homes much more than sales of new homes, it did help keep the market afloat for several months, economists say.

Buyers, fearful of further drops in home values, are unwilling to pay asking prices. "Everyone is negotiating," said Richard Oller, principal in GoldOller Associates, which owns Philadelphia condos. "No one walks in the door and says: 'I'll take it. How much?' "

Builders are working with razor-thin margins, and small- and mid-sized firms are having little luck obtaining bank financing for land acquisition and construction.

Earlier this week, Commerce Department data showed substantive increases in building starts and permits for multifamily housing (condos and apartments) but a minuscule rise in single-family home starts and a decrease in permits for them.

Economists consider single-family houses key to the housing recovery. Data from the National Association of Home Builders show that 41 percent of home buyers between 2007 and 2009 were first-timers.

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