By Kasra Kangarloo
WASHINGTON (MNI) – New home sales are forecast to stay near
record-low levels in February, as housing demand continues to be
siphoned into sales of lower-priced existing homes.
The median sale price for existing homes fell to $156,100 in
February, the lowest level since April 2002, compared to a median new
home price of $230,600 in January.
“The new housing market just cannot compete with the declines in
existing home prices,” Yelena Shulyatyeva, economist at BNP Paribas,
said in a telephone interview. “Sales should stay below 300 [thousand]
for some time. We are bouncing around the bottom.”
The National Association of Realtors reported Monday that on
average buyers are paying a 45% premium for a newly constructed house
over a comparable existing house. That compares to what prior to the
housing bust was a 15% premium.
According to a survey of economists by Market News International,
February new home sales are expected to rise slightly to an annual pace
of 290,000, only slightly higher than the record-low of 270,000 posted
in August.
Existing home sales defied expectations and hit an annual pace of
5.4 million in January, the highest since May, when the market was still
bolstered by the home buyers tax credit.
Despite a setback in sales of existing to 4.88 million in February,
Lawrence Yun, chief economist at the National Association of Realtors,
maintained that the market showed a “gradual but uneven recovery.”
Waning demand for new homes has also taken a toll on the
construction sector. February housing starts were the lowest in nearly
two years, posting an annual pace of 479,000, while total houses under
construction and permits for new construction both hit record lows.
The report for February new home sales will be released Wednesday
at 10:00 am EST by the Commerce Department.
— Kasra Kangarloo is a reporter for Need to Know News
** Market News International Washington Bureau: 202-371-2121 **
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