{"id":470909,"date":"2010-03-25T07:05:59","date_gmt":"2010-03-25T11:05:59","guid":{"rendered":"http:\/\/www.businessinsider.com\/home-prices-will-fall-15-before-they-can-recover-2010-3"},"modified":"2010-03-25T07:05:59","modified_gmt":"2010-03-25T11:05:59","slug":"why-new-home-prices-must-fall-another-15-before-sales-can-recover","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/470909","title":{"rendered":"Why New Home Prices Must Fall Another 15% Before Sales Can Recover"},"content":{"rendered":"<p><em>(This post appeared at <a href=\"http:\/\/www.financialarmageddon.com\/2010\/03\/more-room-to-fall.html\">Financial Armageddon<\/a>.)<\/em><\/p>\n<p>Over the past 48 hours, the Census Bureau and the National  Association of Realtors have announced new and existing home sales,  respectively, for February. As expected (at <a href=\"http:\/\/www.financialarmageddon.com\/\">Financial Armageddon<\/a>, at  least) neither set of data points offered any real encouragement for  those who keep harping on about a recovery in the sector.<\/p>\n<p>In fact, a comparison of annualized sales and median price trends for  both data series reveals an interesting divergence &#8212; one that suggests  new home prices <strong>will need to fall by 15 percent from where they  are now<\/strong> to entice buyers if the historical relationship  between the two markets is anything to go by.<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/image\/4bab41617f8b9acf32140500\/mikepanzer-graph-new-homes-gap.jpg\" border=\"0\" alt=\"mikepanzer graph new homes gap\" \/><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/image\/4bab416b7f8b9ae20bd50b00\/mikepanzer-graph-new-homes-gap.jpg\" border=\"0\" alt=\"mikepanzer graph new homes gap\" \/><\/p>\n<p>How did I arrive at this figure? I took the median differential  (going back to 1999) between the monthly median prices for new and  existing sales, or $23,000, and subtracted that from the latest reported  differential, or $55,400. I divided the net result by February&#8217;s median  price for a new single-family home, or $220,500, and got just under 15  percent.<\/p>\n<p>Of course, my approach might be way off base or overly simplistic,  and I might not be taking proper account of structural differences  between the two markets, including the possibility that the fallout from  burgeoning foreclosures is having a more pronounced effect on the  market for older, rather than newer homes.<\/p>\n<p>Nonetheless, the fact that the new home construction industry remains  fairly pessimistic about the outlook, as the National Association of  Home Builder&#8217;s confirmed when it announced a worse-than-expected reading  for its Market Index earlier this month, lends some weight to the  notion that new homes have not yet reached price levels that many in the  current pool of prospective buyers find appealing.<\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/home-prices-will-fall-15-before-they-can-recover-2010-3#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/8fKOgfvZHUU\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This post appeared at Financial Armageddon.) Over the past 48 hours, the Census Bureau and the National Association of Realtors have announced new and existing home sales, respectively, for February. As expected (at Financial Armageddon, at least) neither set of data points offered any real encouragement for those who keep harping on about a recovery [&hellip;]<\/p>\n","protected":false},"author":264,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-470909","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/470909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/264"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=470909"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/470909\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=470909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=470909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=470909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}