New and Existing Home Sales Decline

Existing home sales fell 8.6% in November to an annualized rate of 4.49 million from a 4.91 million rate in October.  The median price dropped 13.2% from a year ago.  New-home sales were 2.9% lower in November to $181,300.  Inventories rose to 11.2 months' worth at the current sales pace, up from 10.3 months' at the end of October.

Meanwhile, new-home sales didn't fare much better, declining 2.9% to an annual pace of 407,000, with the median price declining 11.5% from a year earlier to $220,400.  The supply of new homes, however, fell slightly to 11.5 months' worth from 11.8 months in October.  

Clearly consumers aren't rushing out to buy homes in the face of all the gloom and doom spouted in the press daily.  Despite much lower interest rates for qualified buyers, it's hard to imagine locking into a large financial commitment when you're not sure you're going to make it through the next round of layoffs.  Or when looking at your 401K statement makes you want to vomit.  Or when you wonder how you're going to pay for your smart child's college education because his/her dream school plans to hike tuition because its endowment punted the money on "alternative investments."  Nevermind the fact that your less-cerebral child's shot at making a decent living in construction or on the assembly line at an automaker isn't looking so hot either.  So everyone is hunkering down and waiting to see what happens next.  When there is a glimmer of hope on the horizon, people will buy homes again.  Until that time, they'll be stashing any cash they can into a 0% FDIC insured account.