New Home Sales Plummet Despite Incentives

Washington, DC, January 28, 2008—Home builders reduced prices by more than 10% in December to boost sales but instead saw sales drop about 5 percent to their lowest level in almost 13 years, according to the Commerce Department.

Sales of new homes fell 4.7% an adjusted annual rate of 604,000 in December, below the 645,000 expected by economists.

It was the slowest rate since February 1995.

November sales were revised down to 634,000 from 647,000.

The sales figures don't include cancellations, which have skyrocketed in the past year.

Median sales price fell 10.9% to $219,200 compared with November and were down 10.4% compared to a year earlier. It's the biggest one year fall in the median sales price since 1970. The average sales price also fell a record 11.5% to $267,300.

New home inventory fell to 495,000 from 502,000, but climbed to a 26-year high in relation to sales, representing 9.6-months' supply.