, On Wednesday November 24, 2010, 10:46 am
WASHINGTON (AP) -- New home sales tumbled in October while the median home price dropped to the lowest point in seven years.Sales of new single-family homes declined 8.1 percent to a seasonally adjusted annual rate of 283,000 units in October, the Commerce Department reported Wednesday.
It was the fourth time the sales rate has dropped in the past six months. New home sales are just 2.9 percent above August's pace of 275,000 units -- the lowest level on records dating back to 1963.
Many economists believe it could take three years for the industry to get back to a healthy annual rate of sales of around 600,000 homes.
The median price of a home sold in October dipped to $194,900, the lowest level since October 2003.
Some analysts downplayed the drop in sales, saying that when the market is this low it is vulnerable to high volatility.
"Sales are bumping along the bottom, showing no real inclination to start recovering or, thankfully, to fall any further," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
High unemployment, tighter bank lending standards and uncertainty about home prices have kept people from buying homes. Government tax credits had propelled the market earlier this year but those expired in April.
Weak housing sales mean fewer jobs in the construction industry, a sector that normally powers economic recoveries.
SHOOT: Bumping along towards another Great Depression...?
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