By ALAN ZIBEL
AP Real Estate Writer
WASHINGTON (AP) — Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky.
The report reflects a slump in demand following the 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.
“Buyer traffic is likely to be flat until spring,” predicted Mark Vitner, senior economist with Wells Fargo Securities.
First-time buyers will still be able to save up to $8,000, and homeowners who have lived in their current properties for at least five years can now claim a tax credit of up to $6,500. To qualify, buyers must ink a deal by the end of April and complete the transaction by the end of June.
The Commerce Department said Wednesday that November’s sales fell 11 percent to a seasonally adjusted annual rate of 355,000 from a downwardly revised 400,000 in October. Economists surveyed by Thomson Reuters had expected a pace of 440,000. Sales were down 9 percent from a year ago.
The median sales price of $217,400 was down nearly 2 percent from $221,600 a year earlier, but up about 4 percent from October’s level of $209,400.
The only strong region was the Midwest, where sales rose 21 percent. Sales fell by 21 percent in the South, 9 percent in the West and 3 percent in the Northeast.
Builders had 235,000 new homes for sale nationwide at the end of November. That was down 2 percent from October and the lowest inventory level since April 1971. At the current weak sales pace, that still represents nearly eight months of supply.
Despite the poor showing from new home buyers, the housing market has been recovering from the worst downturn in decades, largely due to a massive infusion of federal assistance. The National Association of Realtors said Tuesday that sales of previously occupied homes rose 7 percent in November to the highest level in nearly three years.
But builders aren’t brimming with enthusiasm this winter. The National Association of Home Builders said last week its index of industry confidence fell to the lowest level since June, reflecting concern that job losses and a slow economic recovery will continue to stifle demand.
Robert Toll, CEO of luxury builder Toll Brothers Inc. said earlier this month demand has been “choppy” after several strong months in the spring and summer.
“You just have to bite the finger, be patient, and wait until you see what comes out in the latter part of January, all of February and in the early part of March,” he said.