New Home Sales Fall to Lowest Level Since '91

Sales of new homes fell 5.3% in October to the lowest level since 1991 and homebuilders don't expect a turnaround unless Congress provides more incentives to stimulate home sales. The U.S. Census Bureau saw sales of new single-family homes fall from a seasonally adjusted annual rate of 457,000 in September to 433,000 in October. The National Association of Home Builders is forecasting that new home sales will turn up in the first or second quarter of 2009 if Congress makes the homebuyer tax credit more attractive and enacts an interest rate buy-down program. Even with all the moves by the Treasury Department and Federal Reserve, "I don't think that is quite enough to help turn this market around," said NAHB director of forecasting Bernard Markstein. He noted the inventory of newly constructed homes has declined by 190,000 units since the peak in 2006 to 385,000 in October. "We are making progress," he said, but the current inventory still represents an 11-month supply at the current sales pace. Single-family housing starts won't turn up until the inventory gets down to 300,000, Mr. Markstein said.