As a result of the moratorium imposed by lenders on foreclosure auction homes sales, residential property sales figures declined considerably in October 2010 all over the U.S. According to analysts, some market observers hoped that new housing sales will offset the drop in foreclosure sales, but October figures showed that this was not to be.
New housing sales reportedly declined to a yearly pace of 283,000 in October 2010. The figure represents a drop of more than 8% when compared with September 2010. Compared with 2009 when rate of annualized sales was pegged at 430,000, the drop was over 28%. The actual pace of new home sales for this year is considerably lower than the projected figure of 314,000 issued by home industry experts.
Data for new housing sales also showed that current figures declined by 80% when compared with the peak market condition recorded in July 2005. During that time, new homes were sold at an average of 1.4 million per year. Despite the low rates of mortgages on offer, buyers remain reluctant to purchase new houses or even cheap properties offered as foreclosed auction homes. The lowest record of new housing sales was posted on August 2010, when 275,000 new residential units were sold.
According to economists, although prices are at bargain lows and mortgage rates have never been more homebuyer-friendly, most potential buyers are still unwilling to risk whatever money they have on homeownership, mainly because of the ongoing economic downturn and the prevailing fear of unemployment. Under normal economic conditions, the U.S. usually records an average household formation increase of 1% every year.
This usually happens when people who get married find new homes and fresh graduates move out of their family homes to embark on their own. But the economic downturn has convinced most Americans that the best thing for them, financially, is to stay where they are or share houses with relatives and families. For graduates, finding a job has become a challenge and finding money to rent or buy a house has become even more so.
Housing experts have also added that new dwellings are competing with the huge supplies of low-priced foreclosed auction homes. With very little demand for residential properties, both new dwellings and existing houses remain unsold in most areas of the U.S.
source of foreclosures.