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Re-activateWhen it comes to the declining housing market, it's not just sales of existing homes that are suffering. Sales of new homes are hurting, too, according to data released on June 26 by the U.S. Department of Commerce.
In May, new-home sales dropped to a seasonally adjusted annual rate of 915,000. That figure represents a 1.6 percent decline from April and a 15.8 percent slide from May 2006, says the Commerce Department. The May downturn is the fourth decline in five months. The estimated number of new homes for sale nationwide stands at 536,000, a 7.1-month supply.
It should come as no surprise that some U.S. homebuilders are feeling the brunt of the sagging housing market. Lennar Corporation, one of the country's largest homebuilders, announced its second-quarter results the same day the Commerce Department released its report. The Miami-based company stated that its revenues had declined 37 percent to $2.9 billion and that its stock had lost $1.55 per share.
"The housing market has continued to deteriorate throughout the second quarter. The supply of new and existing homes has continued to increase resulting in declining home prices across our markets," said Stuart Miller, president and CEO of Lennar. "We have continued to adjust pricing to meet today's market conditions. This has allowed us to carefully manage inventory levels; however, it has also resulted in lower margins and further impairments." In the statement released with the earnings report, Miller also said, "As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions."—Steven H. Saltzman
Essential information: If you're considering buying a new home, be sure to read "Housewrecked," which explains how to avoid purchasing a new house with hidden defects. Also watch our exclusive interactive on the warning signs of shoddy homebuilding.
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