New home sales down by 1/3 from last year

As builders continue to compete -- generally unsuccessfully -- against heavily discounted foreclosures and are unable to obtain financing for new homes, sales of newly built units fell by 33% between May of 2008 and 2009. But is a bottom about to be reached? First, from an L.A. Times story:

The seasonally adjusted annual rate of new-home sales was down 0.6% from April and fell 32.8% from May 2008, amid a glut in housing. New-home sales in the West, however, were up 1.3% over April's adjusted annual rate...

The median sale price for a new home in May was $221,600, down 3.4% from a year earlier.

But in the battered Inland Empire, the pace of decline is showing marked signs of slowing. Yesterday I spoke with Lou Hirsh of the Riverside Press-Enteprise:

Inland new home sales in April were down 20 percent from April 2008. That is lower than the 28 percent year-to-date decline compared with the first four months of 2008, and the 41 percent decline seen for the period of May 2008 to April 2009.

"That tells me that we're getting closer to the bottom," said Patrick Duffy, a principal and analyst with MetroIntelligence Real Estate Advisors in Los Angeles.

Duffy said the cancellation rate on new Inland homes in April was 7.8 percent in April, versus 22 percent a year ago. Declines in inventory absorption rates and median asking prices are also less severe than at the same point of 2008...

National experts said that without bigger price cuts, builders may keep losing market share as the jobless rate and foreclosures climb, aggravating the drop in resale prices.

"Further increases in mortgage rates would be a huge concern amid rising unemployment and falling incomes," Aaron Smith, a senior economist at Moody's Economy.com in West Chester, Pa., said before the Commerce Department report...