The Commerce Department announced that new home sales fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That is the slowest pace since 1963, and the past three months have been the worst on record for new home sales.
On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders. “If new homes aren’t selling, there’s no incentive to build more,” said Nigel Gault, Chief Economist at IHS Global Insight. More than 600,000 new homes were sold each year from 1983 through 2007. Sales dropped to 375,000 homes last year, which is the weakest yearly total on record. Builders have sharply scaled back construction in the face of weak sales. The number of new homes up for sale at the end of July was unchanged at 210,000, the lowest level in about 40 years. Due to the slow sales pace, it would still take more than nine months to exhaust the excess supply; that is above a healthy level of about six months. The median sales price was also down in July to $204,000, which is 4.8 percent lower then last year and down 6 percent from June.