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Worsening Data Underscores Need for Housing Stimulus
The U.S. Commerce Department today reported that sales of newly built single-family homes slid 14.7 percent to the lowest monthly pace on record in December of 2008.
WASHINGTON, Jan. 29 - In the latest clear evidence of worsening distress in the housing market, the U.S. Commerce Department today reported that sales of newly built single-family homes slid 14.7 percent to the lowest monthly pace on record in December of 2008. This double-digit decline, on top of substantial downward revisions to home sales data for the previous three months, brought the seasonally adjusted annual rate of new home sales to just 331,000 units for December, representing a 76 percent decline from the market peak in 2005.
"What more proof do you need that the housing downturn is accelerating -- bringing the economy with it -- and that the government must take substantive action to get qualified buyers back in the market?" said Joe Robson, a home builder from Tulsa, Okla. and newly elected 2009 Chairman of the National Association of Home Builders (NAHB).
"We need a significant stimulus on the demand side, because otherwise, home sales will only continue downward, dragging down home values, consumer confidence and consumer spending, which in turn creates further downward pressure on sales," Robson continued. "Because this vicious, self-perpetuating cycle can only be curtailed by offering a real incentive to those on the sidelines, NAHB is urging Congress to substantially enhance and extend the $7,500 first-time home buyer tax credit as part of the economic stimulus package that it plans to send to the President's desk within the next two weeks. Doing so would go a long way toward putting a floor under declining home values that are at the core of the current economic crisis."
"Clearly the housing downswing is worsening, and even historically low mortgage rates have not provided sufficient support to the marketplace," noted NAHB Chief Economist David Crowe. "Even the recent uptick in existing home sales is no source of comfort, since this movement is driven by distressed and foreclosed homes that continue to flood the market at fire sale prices, resulting in further deterioration in home values.
"The only positive note in today's report is that, due to prudent home builder action to restrain production, the number of new homes for sale continues to decline," said Crowe. "But even as this happens, the months' supply of homes on the market continues to rise, due to further slowing of sales activity. Basically every number in this report further bolsters the argument that substantive government action must be taken to stimulate housing demand, restore home values and revive the U.S. economy and job market."
The inventory of new homes for sale declined for the 20th consecutive month in December to 357,000, while the months' supply at the current sales pace increased for a third consecutive month to 12.9.
New-home sales were down across every region in December, with a 28.2 percent decline registered in the Northeast, a 5.6 percent decline in the Midwest, a 12.1 percent decline in the South and a 20.2 percent decline in the West.
For the year as a whole, sales were down 38 percent across the United States in 2008, falling 50 percent in the Northeast, 31 percent in the Midwest, 46 percent in the South and 47.4 percent in the West.
ABOUT NAHB: The National Association of Home Builders is a Washington, D.C.-based trade association representing more than 200,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the new housing units for 2009.