• 23
  • March
    2011

Last month, new single-family home sales dropped dramatically in Tennessee and throughout the country, reaching the lowest sales rate on record in the United States. In addition, new home sale prices also dropped to their lowest average in over seven years, leading many real estate market analysts to conclude that foreclosure sales are undermining new home sales in more ways than one.

In January, the median sales price for a new single-family home fell by almost 13 percent to $202,000. That is a drop of almost 9 percent from February of last year, and is the lowest median price since December of 2003. Analysts say this is likely due to the increasing numbers of foreclosed homes on the market, most of which come with much lower prices.

Currently, new home prices are averaging 45 percent higher than existing home prices. Normally, new homes cost about 15 percent more, meaning that foreclosures continue to clog up the housing market.

In addition to the historically low prices, the number of new homes sold has also dropped dramatically. In February, there were only about 250,000 new homes sold, which is a 17 percent from the previous month and a 28 percent decrease from February of last year.

New homes are currently making up less than 10 percent of overall home sales. Because of this, builders have essentially halted construction on new homes throughout the country. There were only 186,000 new homes on the market last month, which is the smallest number of new homes for sale since 1967. However, there are still almost nine months' worth of homes on the market, meaning that the housing market will likely not see any sort of recovery in the near future.

Source: Reuters, "New home sales plunge to record low in February", Lucia Mutikani, 23 March 2011