NPR logo Nobody's Buying New Houses, Either

Nobody's Buying New Houses, Either

Americans bought fewer newly built houses in July than in any month since 1963, when the government started keeping track.

New home purchases were down 12 percent from June, and 32 percent from July of '09, according to government figures released this morning.

Just yesterday,we learned that sales of existing homes were also superlow in July.

Both figures suggest that house prices may fall further (as do really long-term trends, which show house prices are still above the historical average).

The slump is at least partly a hangover from a government program aimed at stimulating the housing market. The program paid people to buy houses and expired at the end of April.

Sales of new homes rose for the first several months of this year, and peaked in April, just before the program expired.

That suggests that some people who would have bought houses later in the year hurried up and bought them sooner to take advantage of the government tax credit.

The credit was targeted largely at first-time homebuyers; Inside Mortgage Finance notes that first-time homebuyers accounted for 39 percent buyers in July — the lowest level in at least a year, and was down from 48 percent in March.

Weak demand for new homes also suggest a grim outlook for construction jobs. And the slump will be a drag on GDP, which includes sales of newly built homes but not existing homes.