Don't look to the new home market for glad economic tidings: Home builders had another dismal sales month in October, falling to just one-fifth of the sales rate during the boom five years ago.
New home sales dropped to an annual pace of just 283,000, according to the Commerce Department. That was down 8.1% from a slow September and 28.5% from 12 months ago when the annualized sales rate was at 430,000.
The sales rate is off nearly 80% from the housing boom peak of 1.4 million, set in July 2005. Sales have remained near historic lows this year despite very attractive mortgage interest rates that slash the monthly costs of homeownership.
Helping to depress home sales are stubbornly high unemployment rates, which result in fewer households being formed. Usually, household formation rises 1% a year or more as people get married, come to the states from overseas, and start careers. But the poor economy has meant that many grads can't find jobs, and so they move in with parents instead or double up with peers. Fewer immigrants arrive and couples delay marriage. All of those things diminish home sales.