New home sales fall to lowest level since March
Unexpected 11.3 percent drop sets back sector showing signs of stabilizing
WASHINGTON - Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky.
The 11 percent slump from October's pace shows that consumers are taking their time following an extension of a deadline for first-time buyers to qualify for a tax credit. The incentive was set to expire at the end of November, but Congress pushed back the date to April 30 and expanded the program to include current homeowners who relocate.
"They don't have to act today," said David Crowe, chief economist at the National Association of Home Builders, who called the results "pretty awful."
New home sales data, released Wednesday, are a better indicator of future real estate activity than sales of previously occupied homes, but capture a smaller slice of the market. The new home figures tally sales agreements signed in November, while home resale numbers reflect contracts signed over the summer that were completed in November.
So while home resales rose 7 percent last month, the National Association of Realtors reported Tuesday, most economists expect completed sales to decline during the winter months.
"Buyer traffic is likely to be flat until spring," predicted Mark Vitner, senior economist with Wells Fargo Securities.
