Louisville Properties Blog
Louisville Properties Blog

Federal Reserve

Sales of New Homes Drop 11.3% as Effect of Stimulus Fades

The Wall Street Journal reports that sales of new homes dropped more than eleven percent in November 2009 to a seven-month low. Real estate experts are cautiously optimistic about the country's modest, but steady economic gains. However, there is growing concern that new home sales and sales of existing homes could dive again after the federal homebuyer tax credit program expires in a few months. One real estate economist said, "The housing rebound has so far been largely supported by government programs, raising questions of sustainability as these programs end next year."

Peter Newland, an economist with Barclays Capital, was more optimistic. "Growth may slow from its current pace; but even as the government's fiscal boost fades, wages and salaries can provide underlying support for consumer spending."

The Commerce Department reported that the decline in home sales led to a seasonally adjusted rate of 355,000 new homes built, bolstered by a 7.4 percent increase in October that represented a surge in new home sales from previous months. This surge was attributed to the homebuyer tax credit scheduled to expire at the end of October but was extended. Their report also mentioned that new home sales typically comprise less than 15 percent of the total number of homes sold in the U.S. every year.

New home sales in Louisville reflected the national average. Like other housing markets across the country, sales of new homes were impacted by the current inventory of new, unsold homes. If you're looking...

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