The sales price of new homes dropped by 9.7 percent in September, based on year-to-year data, to a median sales price of $217,100 in the United States. The drop was the sharpest year-to-year decline since December 1970.
The news followed a similar drop in existing home sales prices, which saw their largest drop ever at 2.5 percent last month from a year-ago period.
The good news is that the drop in prices seems to be fueling a bit of buying activity, as sales rose 5.3 percent, an increase for the second consecutive month after three months of declines.
This data serves as yet another sign that the housing bubble has burst, although the severity is still relatively unknown. Considering mortgage rates were at 40 year lows no more than 2 years ago, and home prices had risen for five straight years, this isn’t necessarily alarming news.
The trend seems to be favoring more of a downturn, and all eyes will be on the Fed to see whether the lull is enough to induce an all out recession.