New home sales hit 9-year low 6.7% December drop worse than expected

February 01, 1991|By Los Angeles Tmes

Triggered by continued consumer uncertainty about the economy and events in the Persian Gulf, new-home sales plunged in December to their lowest level in nine years as Americans virtually stopped buying new houses.

The 6.7 percent drop in new-home sales in December exceeded the forecasts of many analysts who have watched home sales fall now in five out of the last six months.

The Department of Commerce yesterday said new-home sales totaled a seasonally adjusted annual rate of 463,000 units in December, the lowest level since 407,000 homes were sold in August 1982. New-home sales in 1990 fell for the second consecutive year, down 17.5 percent to 536,000 units, the smallest number since 412,000 homes were sold in 1982.

"What the numbers show is that there continues to be weakness in the new-home market even though mortgage rates declined from November to December," said Mark H. Obrinksy, senior economist at the Federal National Mortgage Association in Washington. "I don't see anything to indicate we're near a turnaround."

The median price of a new home rose 10.8 percent in Decembeand now stands at $133,000. The median price of new houses sold throughout the year was $123,000, up 2.5 percent from $120,000 in 1989. The median price means half of the homes cost more, half less.

The contraction in the housing industry has lost nearly 300,00construction jobs across the country since last spring.

Still, some analysts found cause for hope in a recent Conference Board survey that said consumer confidence may be rebounding after dropping immediately following the outbreak of war.

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