New-home sales post worst year on record

New-home sales dropped in December, making 2011 the worst sales year on record.  

Sales of new homes dropped last month to a seasonally adjusted annual pace of 307,000, 7.3 percent below the December 2010 estimate of 331,000, the Commerce Department reported Thursday. 

About 302,000 homes were sold in 2011, 6.2 percent below the 323,000 sold the previous year — the worst performance since record-keeping began in 1963 — as cheaper foreclosures and short sales attracted buyers bogged down the market. 

December's sales were 2.2 percent below the revised November rate of 314,000 and less than half the 700,000 economists say reflects a healthy housing market. 

The median sales price of new houses sold in December was $210,300 while the average sales price was $266,000. 

Housing experts were predicting a dismal year as sales remained sluggish. 

The seasonally adjusted estimate of new houses for sale at the end of December was 157,000 — a supply of 6.1 months at the current sales rate.

Some housing experts, including David Crowe, the chief economist at the National Association of Home Builders, said recently that the housing market has hit bottom and he expects gradual improvement this year before growth accelerates faster in 2013. 

"The three-month moving average for new-home sales and numerous other indicators — such as builder confidence, new building activity and the razor-thin inventory of new homes for sale — show that the market is basically holding its own, and no longer moving backwards," Crowe said in a statement on Thursday. 

"However, many of the same challenges that builders have cited in the past continue to pose obstacles to the market's advancement, including buyers' inability to sell an existing home, consumer concerns about job security and tight credit conditions for both building and buying new homes," he said. 

New-home sales represent a small portion of the housing market but have a larger economic effect, creating three jobs and about $90,000 in tax revenue, according to the NAHB.

The group has pointed out that areas all around the country are seeing improvement beyond the national average, including some large metropolitan areas, while the bulk of foreclosures remain concentrated in the five states with the worst rates.

Still there are positive signs in the housing market — existing home sales rose in December for the third straight month and mortgage rates remain at or near historic lows. 

Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.

Home construction also ended the year with the worst showing in 50 years. 

Meanwhile, construction of new single-family homes rose 4.4 percent to a seasonally adjusted annual rate of 470,000 units in December, the third consecutive increase and the fastest pace since April 2010. 

This story was updated at 2:15 p.m.