This should not come as a surprise to Daily Bail readers. Five more years of falling prices and we might start to reach historical norms for income vs. housing.
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Source - Marketwatch
WASHINGTON (MarketWatch) — Sales of new single-family homes collapsed in February, the Commerce Department reported Wednesday, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill.
New-home sales fell 16.9% to a seasonally adjusted annual rate of 250,000 in February, though January’s figures were revised higher to 301,000 from 284,000. Compared to February 2010, sales collapsed by 28%.
Every region but the West saw record lows, and in the Northeast, sales dropped by 50% compared to year-earlier levels.
Read “Dismal home-sales data tell us nothing new.”
“The housing market has literally collapsed,” said Tony Sanders, a real estate finance professor at George Mason University. “We’re stuck, it’s not going to revive in the spring and may not in the summer.”
Economists polled by MarketWatch had expected a slight rise to a 290,000 rate in February. While inclement weather may have played a role in the particularly poor showing during the month — the particularly nasty dive in the Northeast and Midwest lends support to such a view — analysts said the figures were reflective of a basically dead market.
“The details of the new-home sales release clearly indicate that the housing market remains incredibly soft,” said David Resler, chief economist of Nomura Securities International.
“There’s massive excess [supply] on the market, interest rates are not at record lows, tighter credit standards, unemployment is not decreasing fast enough and throw in oil and gas prices, that sends a big stop sign on consumers buying homes,” Sanders said.