Sales of new-home declined in December, dropping 2.2 percent, and marking the end to the worst year on record for new-home sales, the Commerce Department reported Thursday.
New-home sales reached a seasonally adjusted annual pace of 307,000 in December — less than half the 700,000 pace that economists consider healthy for the sector.
In 2011, 302,000 new Homes were sold nationwide, overtaking 2010’s 323,000 sales that had previously marked the worst year for sales on record.
The new-home sector continues to struggle to compete against discounted distressed properties that are plaguing many markets and have put downward pressure on home prices. Builders also say tighter lending standards are preventing some home buyers for qualifying for financing, and appraisals of new-Homes are coming in lower on the agreed upon purchase price, causing more deals to fall through.
In December, the median sales price of a new-home was $210,300, according to the Commerce Department.
Despite the latest numbers from December, new-home sales rose in the overall final quarter of 2011. Home construction for single-family Homes increased in the final three months of 2011, and an index measuring homebuilder sentiment showed builders are more positive about where the market is heading too.
"Although this [December] decline was unexpected, it does not change the story that housing has likely bottomed," Jennifer H. Lee, senior economist at BMO Capital Markets, told the Associated Press.