Sacramento New Home Sales Plunge 57%

The Sacramento Bee reports new home sales fell 57% in the last quarter of 2005. One homebuilder has actually cut their prices.

Sales of new homes in the Sacramento region plunged 57 percent in the last three months of 2005, forcing builders to offer buyers sweeter deals...

In some cases, builders are simply lowering their prices. For example, KB Home, one of the region's largest builders, recently cut prices on many homes 3 to 5 percent to stoke sales, said Jefferey Fautt, the builder's local division president...

The slower market helped nudge down the median sale price - the point where half of the homes sold for more and half for less - for new homes in the six-county region to $456,619. That's a decline of just under 1 percent compared with both the previous quarter and the fourth quarter of 2004, the Gregory Group said. Sales dropped 57 percent compared with the previous quarter as well as with the same quarter 2004.

Increasingly, consumers are realizing the market pendulum has swung in their favor, and they're out looking for deals...

Economist Chris Thornberg of UCLA's Anderson Forecast said the Sacramento region's 57 percent decline in sales during the fourth quarter "sounds too dramatic to me to be realistic." Paquin said he's carefully rechecked his builder survey and is confident in the results...

Thornberg said he's particularly concerned about markets like Sacramento, where he said much of the region's job growth has been tied to the housing boom. As the market cools, many real estate-related jobs will disappear, he said, and without appreciation people will feel less wealthy and spend less.

"This can reverberate throughout the economy," Thornberg said "It's not constrained to the real estate market."