MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
MELISSA BLOCK, host:
And I'm Melissa Block.
A surprise from the housing market today. The number of new homes sold in the U.S. was up in August over the previous month - that's after three straight months of declines. The median price of a new home also rose, though only slightly, on a monthly basis. But if you think the downturn in the housing market is over, analysts were quick to point out that the up tick may be temporary and that both sales and median prices are down from a year ago.
NPR's Jack Speer reports.
JACK SPEER: If you're a homebuilder, you've had an extraordinary run over the last five years. The National Association of Realtors says home prices in the U.S. have risen 50 percent since 2000. But times have changed. Listen to this exchange between Jose Weeks, a potential buyer, and Mark Rathbun(ph), a sales associate with K. Hovnanian Homes.
Mr. JOSE WEEKS: Well, obviously, all of these have two-car garages, four bedrooms, right?
Mr. MARK RATHBUN (K. Hovnanian Homes): Yeah, absolutely. That's where we start.
MR. WEEKS: What kind of incentives you have right now?
Mr. RATHBUN: Our incentives are basically we'll help you out with closing costs and we'll help you out with the finishing of the largest room in the basement.
SPEER: And exchanges like this one are increasingly common. At this upscale development in northern Virginia known as Eagle's Point, single-family homes start at around $600,000. Hovnanian's Emilio Martinez says along with free extras, they're also working with potential buyers to help them sell the house they're in. Something he says they haven't done in years.
Mr. EMILIO MARTINEZ (Kay Hovnanian Homes): It's a very nice insurance policy for the buyer. They go into the transaction knowing exactly what the worst-case scenario would be, and I think that offers them some piece of mind of, you know, I know exactly I'm going to get $350,000 at worst case scenario.
SPEER: Other big builders like Toll Brothers, Pulte and Lennar are offering similar deals, in some instances offering below market mortgage rates, even providing bridge loans to buyers until they can sell their homes.
Homebuilders would like to believe those incentives are what caused the rebound in new home sales last month. But that's far from clear. It may have been a slight decrease in long term mortgage rates. Most analysts agree the housing market hasn't bottomed out yet. There's a glut of both new and old homes on the market right now.
Nicholas Retsinas directs the Joint Center for Housing Studies at Harvard.
Mr. NICHOLAS RETSINAS (Joint Center for Housing Studies, Harvard): Buyers are looking at having many, many more choices. Here a year and a half ago in these hot markets, buyers were getting skittish and nervous. They'd see a house on the market and they'd be afraid if they didn't act quickly the price would increase so that it would be out of reach.
SPEER: Now it's exactly the opposite, with many homebuyers expecting prices to fall further in coming months. David Wyss, the chief economist at Standard and Poor's, expects as in past downturns, some builders will be hurt.
Mr. DAVID WYSS (Standard and Poor's): These guys always get caught. Housing is a very cyclical market. A lot of the smaller builders particularly, who still dominate the business, are not terribly well financed. They always tend to go out on a limb in these bull markets and then they don't have the resources to withstand the bear market.
SPEER: Still most big homebuilders believe they will weather the current downturn, are perhaps more concerned that many economists as what the slowdown will mean for the broader economy. The housing sector accounts for millions of jobs and a significant share of overall U.S. economic activity.
Jack Speer, NPR News, Washington.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.