Homebuyers in the US are shunning new homes as purchases are now at record low levels with the figures for April showing that the property market remains a weak link in the US recovery.
The number of new homes sold in April was 300,000 which is the same as March, but it seems as if buyers are choosing to purchase previously owned homes which is having a serious effect on homebuilders.
The figures for this months new-home sales are not expected to show any significant improvement. The high levels of foreclosures will continue to have a negative effect on property prices. Unemployment levels are now at 9% and wages are remaining static.
When this is combined with tighter credit regulations it seems likely that a recovery in the housing market will take years. Steve Blitz, a senior economist for ITG Investment Research Inc in New York feels that new-home sales will remain depressed due to the considerable housing inventory.
The chief financial officer of D.R. Horton, Bill Wheat feels that demand will remain weak into 2012. D.R. Horton is the second largest homebuilder in the US.
Housing starts fell by 11% in April to 523,000, as builders have already begun to cut backoreLogic Inc estimated in March that there were 1.8 million homes that were more than three months delinquent, already in foreclosure or bank owned, and there are already 3.87 million pre-owned homes on the market which will continue to affect sales of new houses.
At the peak of the market, new-home sales accounted for 16% in July 2005, while in March they accounted for just 5.6% of the market.
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