New home sales plummet 11.3%

November decline largest in 12 years

December 24, 2005|Associated Press

WASHINGTON -- Sales of new homes plunged in November by the largest amount in nearly 12 years, the most dramatic evidence yet that the booming housing market is starting to cool off.

The Commerce Department reported yesterday that sales of new single-family homes fell by 11.3 percent last month to a seasonally adjusted annual rate of 1.245 million units.

Analysts had been expecting a drop of around 8.7 percent given that sales in October had jumped unexpectedly to a record high. But many said the size of the decline was a clear indication that the five-year boom in housing has peaked.

In addition to the big plunge in sales, the median price of a new home dropped by 4.1 percent from the October level to $225,200. That was up only 0.3 percent from November 2004, representing a marked slowdown from what had been double-digit price gains.

In a second report yesterday, the Commerce Department said that orders to US factories for big-ticket manufactured goods jumped to a record $223 billion in November, a 4.4 percent increase from October that was the biggest percentage gain in six months.

However, the overall figure was heavily influenced by a 133.8 percent surge in demand for commercial aircraft. Excluding all transportation, orders fell by 0.6 percent, the third consecutive decline outside of transportation.

Home sales were down in all parts of the country except the Northeast, where they staged a 13.4 percent surge, the biggest percentage increase in this region since January 1994.