Home Sales and Prices Fall Sharply

Sales of new homes plunged in August to their slowest pace in more than seven years as tighter credit and rising inventories continued to weigh down the housing industry. The grim statistics could foreshadow further economic weakness in the fourth quarter, analysts said.
The median price for a new home was down 7.5 percent from a year earlier, to $225,700, the steepest monthly price drop since December 1970.

The sales figures were released as KB Home, a large Los Angeles builder, reported a $35.6 million loss in its fiscal third quarter, or 46 cents a share, in contrast to a profit of $153.2 million, or $1.90 a share, in the period a year earlier. KB Home had a 32 percent drop in revenue, to $1.54 billion.
The company’s chief executive, Jeffrey T. Mezger, said in a statement yesterday: “Our third-quarter results reflect the seriously challenging market conditions that prevail for home builders across most of the nation. At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins.”
“Anybody that’s expecting a turnaround in housing anytime soon is going to be disappointed,” said Mike Schenk, a senior economist at the Credit Union National Association. “It’s going to be a long, slow process.”