New-Home Sales Fall to 12-Year Low

New-homes sales fell by 9% in November to the lowest level in 12 years, but slumping sales are not expected to bottom out before the middle of next year.The U.S. Census Bureau reported that sales of new single-family homes fell from a seasonally adjusted annual rate of 711,000 in October to 647,000 in November. But Mark Vitner, a senior economist at Wachovia Corp., warned that the data are "very suspect" at this time of year. Last November, it appeared that sales were bottoming out because of mild weather. This November, bad weather in the Midwest is being blamed for half of the drop in sales. But the only "good news" in this report, he said, is that builders are reducing their inventories of unsold homes, which are down 12% from the peak in July 2006. "We will likely see sales continue to fall all through the year, but the biggest percentage declines and the biggest outright decline will be over by the middle of the year," Mr. Vitner said. So far, new-home sales have declined by 47.7% since November 2005.