US new home sales at 17-year-low

The US housing slump is continuing

US sales of new homes slowed to their lowest level in 17 years in November, while new home prices dropped by the biggest amount in eight months.

New home sales fell to a seasonally adjusted annual sales rate of 407,000 - down 2.9% from October, according to the US Commerce Department.

The figures are further evidence of the slump in the US housing market.

The market is unlikely to recover until prices fall far enough to reduce the large number of homes for sale.

November's new home sales figure was worse than economists had expected and was the slowest sales pace since January 1991.

Sales slump

Builders have struggled to reduce production in the face of a two-year slump in housing that has seen sales and prices plummet.

November sales activity has been depressed by the worst financial crisis since the 1930s, and by the fact that it is harder for potential buyers to get home loans.

The year-on-year decline in home sales in November - comparing it with November 2007 - was 35.3%.

The mid-price of a new home sold in November was $220,400 (£149,900) a drop of 11.5% from the sales price a year ago.

That was the biggest year-over-year price decline since a 12.7% fall in March of this year.

The inventory of unsold new homes stood at 374,000, which was down 7% from October's level.

Economists say this figure is still seen as too high, given that many houses are being dumped onto an already glutted market by a tide of mortgage foreclosures.

Many analysts believe the housing slump will last well into next year, given the difficult sales environment.