The scarry part of the article for me is the projected home sales of 750,000. If every home gets inspected then there is work for only about 3,000 home inspectors. 3,000 Home Inspectors X 250 Home inspections per year = 750,000 Total Home Inspections.
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U.S. New-Home Sales Lower Than Forecast in October (Update1)
By Shobhana Chandra (Bloomberg)
Nov. 29 (Bloomberg) – Fewer new homes than forecast were sold in the U.S. in October even as prices dropped by the most in almost four decades, deepening the real estate slump that threatens to stall economic growth.
A total of 728,000 new houses were purchased at annual rate, compared with a median forecast of 750,000 of economists surveyed by Bloomberg News. The figure was up from a revised 716,000 pace in September that was the lowest in almost 12 years, the Commerce Department reported today in Washington.
The collapse in subprime lending and turmoil in financial markets are projected to extend the housing recession well into 2008. Some economists now forecast the world’s biggest economy will grow this quarter at less than a fifth the previous three months’ pace, prompting the Federal Reserve to lower rates.
There is no question there has been another big leg down in housing in recent months,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who forecast sales would drop to a 725,000 pace.Prices will continue to slip.’’
The median price of a new home dropped 13 percent, the most since 1970, to $217,800 in October from a year earlier.
Economists had forecast new home sales would decline to a 750,000 annual pace from an originally reported 770,000 rate the prior month, according to the median of 71 estimates in a Bloomberg survey. Forecasts ranged from 705,000 to 785,000.
U.S. Treasury securities held earlier gains after the report. The benchmark 10-year note yielded 3.94 percent as of 10:06 a.m. in New York, down 9 basis points from yesterday.
Growth Revision
The economy grew at an annual rate of 4.9 percent, the most in four years, according to revised data today from the Commerce Department in Washington. The pace is a percentage point stronger than estimated last month and follows a 3.8 percent rate in the second quarter.
Figures on first-time jobless claims suggested the labor market was cooling as growth slows. The number of Americans filing applications for unemployment benefits rose to 352,000 last week, the most since February, the Labor Department reported. The total number of workers on benefit rolls shot up to a two-year high.
Kohn’s Outlook
The housing sector has continued to decline and to erode at a very, very rapid rate,'' Fed Vice Chairman Donald Kohn said yesterday in response to a question after a speech in New York.It would be nice to see some early signs that it was beginning to stabilize, and we haven’t seen that yet.’’
Investors and traders await a speech from Fed Chairman Ben S. Bernanke on the economic outlook at a 7:00 p.m. today in North Carolina. Kohn suggested yesterday he would be open to the possibility of lowering the target interest rate again. Central bankers next meet on Dec. 11.
Inventories decreased. The number of homes for sale fell 2.3 percent to a seasonally adjusted 516,000. The supply of homes at the current sales rate dropped to 8.5 months’ worth from 9 months in September.
Sales of new homes were down 24 percent from the same time last year.
Purchases rose in three of four regions. They climbed 14 percent in the Midwest, 6.8 percent in the South and 1.8 percent in the Northeast. Sales dropped 16 percent in the West.
Previously Owned Homes
Sales of previously owned homes fell in October to the lowest level in at least eight years, while the supply of unsold homes rose to 10.8 months at the current sales pace, also the highest since record keeping began in 1999, the National Association of Realtors reported yesterday.
New-home purchases are considered a timelier indicator because they are based on contract signings, while existing home sales are calculated when a contract closes, usually a month or two later. New home sales account for about 15 percent of total home sales and those of existing homes account for the rest.
The worst U.S. housing slump in 16 years will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report this week by the U.S. Conference of Mayors. The 361 largest U.S. cities will experience a combined loss of $166 billion in economic growth, it said.
Banks are tightening lending rules, buyers are waiting for bargains and the number of foreclosed properties is rising. As a result, prospects are poor for a quick recovery, executives at homebuilders D.R. Horton Inc. and Beazer Homes USA Inc. said.
Next year ``is going to be worse than ‘07 for us and for the industry in general,’’ D.R. Horton Chief Executive Officer Donald Tomnitz said at a conference in Las Vegas this week.
Residential construction, which has subtracted from economic growth every quarter since the first three months of 2006, will remain a drag, economists said.
Fed policy makers reduced their growth forecasts when they last met on Oct. 31. They projected the economy would grow between 1.8 percent and 2.5 percent in 2008, ``notably below’’ their last forecast issued in July, according to meeting minutes released Nov. 20.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: November 29, 2007 10:20 EST
