Dec. New Home Sales

New-Home Sales Down (Again)

According to the Commerce Department, sales of new, single-family homes decreased by 14.7% in December to a seasonally adjusted annual rate of 331,000.

Frankly, given the economy, accelerating layoffs, etc., it would have newsworthy if new-home sales hadn't dropped hard.

Silver linings? Not if you're a builder, a contractor, or a developer.

However, it's worth noting that 2008 now shapes up as the worst year for new housing since 1982. If 2009-2026 is half as prosperous as 1983-2000 turned out to be, things will be ok (heads up in 2027).

Second, prices stop falling when supply shrinks and demand grows.

Right now, policymakers are focused on goosing demand (lower interest rates, first-time Buyer tax credits, etc.). However, reducing the supply of new homes -- new construction is also down big -- serves to correct the market equally well.