U.S. & World

WASHINGTON (AP) ― Sales of new homes fell in November to the slowest pace in nearly 18 years, while new home prices dropped by the biggest amount in eight months.

The Commerce Department reported Tuesday that new home sales fell 2.9 percent to a seasonally adjusted annual sales pace of 407,000 units. That was a weaker performance than economists had expected and was the slowest sales pace since January 1991.

The median price of a new home sold in November was $220,400, a drop of 11.5 percent from the sales price a year ago. That was the biggest year-over-year price decline since a 12.7 percent fall in March of this year. The median is the point where half the homes sold for more and half for less.

The annual sales pace of 407,000 new homes was even weaker than the 420,000 expected by private economists. In addition, the government revised the October performance sharply lower to a sales rate of 419,000 units, instead of the 433,000 sales previously reported.

Builders have struggled to reduce production in the face of a two-year slump in housing that has seen sales and prices plummet. November sales activity was depressed by the worst financial crisis in seven decades, which has made it harder for potential buyers to get home loans.

The year-over-year decline in November was the biggest since a 50.5 percent plunge in the 12 months ending in April 1980.

The inventory of unsold new homes stood at 374,000 in November, down 7 percent from the October inventory level. It would take 11.5 months to exhaust the current supply of new homes at the November sales pace. That inventory bulge is still seen as too high, given that many houses are being dumped onto an already glutted market by a tide of foreclosures.

Many analysts believe the housing slump will last well into next year, given the difficult sales environment.

The sales weakness in November reflected a 16.4 percent drop in the Midwest and a 7.1 percent fall in the South. Sales were up 14.3 percent in the Northeast and 11 percent in the West.

Sales of existing homes plunged far more than expected last month as buyers recoiled from October's financial wreckage on Wall Street. The median sales price fell by the largest amount on record.

The National Association of Realtors said Tuesday existing home sales fell 8.6 percent to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.

Sales had been expected to fall to a pace of 4.9 million units. according to Thomson Reuters.

The median sales price plunged 13.2 percent in November to $181,300, from $208,000 a year ago. That was the lowest price since February 2004, the biggest year-over-year drop on records going back to 1968 and most likely the biggest drop since the Great Depression.

Lawrence Yun, the normally upbeat chief economist of the Realtors group, found few positive spots in the month's dismal data. But he did note that after prior stock market crashes home sales usually rebounded within a few months.

"We hope that, similarly, the current slowdown in home sales activity is a short-term phenomenon," Yun said, noting that people in the real estate industry are "crossing our fingers" that the market will recover. Sales fell around the country, with the largest drop - of 12 percent - in the Northeast.

Nationally, the Realtors group estimates that sales of distressed properties made up 45 percent of all property sales in November.

There were 4.2 million unsold homes on the market in last month. At the current sales pace, it would take 11.2 months to sell all the properties, matching a record set last spring.

The glut is being driven by a massive wave of mortgage foreclosures. And until the inventory of homes falls to more normal levels, analysts say, the housing slump is likely to persist.

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