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New-home sales in Nov. drop to a 12-year low

One bright spot: Philadelphia-area builders say conditions here are better than in trouble spots such as Florida and California.

Multiple signs advertise homes for sale in San Diego amidthe housing slump. In November, 647,000 new homes were reported sold nationwide, a 9 percent dip from October.
Multiple signs advertise homes for sale in San Diego amidthe housing slump. In November, 647,000 new homes were reported sold nationwide, a 9 percent dip from October.Read moreJACK SMITH / Bloomberg News

Nationwide new-home sales in November slid to their slowest pace in more than 12 years and were more than 50 percent off their peak in July 2005.

Philadelphia-area home builders said conditions were not as bad here, cautioning that trouble spots - such as Florida, Nevada, Arizona and California - were driving the national numbers.

"Things aren't as good as they once were," but the current numbers look so bleak only because the peaks of two or three years ago were so high, said Craig Poff, owner of MJJ Investments, a Chester County developer.

Overall home sales in a 13-county region around and including Philadelphia peaked in 2005 at 96,082 units. Sales were 87,468 in 2006 and 73,186 through November of this year, according to Trend, a data service used by the residential real estate industry. The figures include existing and new homes and some multifamily units.

The national numbers released yesterday by the Census Bureau included only newly built single-family houses. Last month's annual rate of 647,000 was down 9 percent from October and off 34 percent from a year ago. The peak rate in July 2005 was 1.39 million.

Home builders said there were many potential buyers in the market, but they lacked confidence in the economy and were really doing their homework to make sure they got the best deal. Some are hesitating to buy because they think prices may be lower in the future.

Buyers are looking at the market and seeing that prices have come down for the first time in years, said Richard Dougherty, owner of Ambassador Homes Inc. in Pottstown. That leads them to ask themselves: "Why should I buy a house for $500,000 when in a year it may be worth only $450,000," Dougherty said.

Some buyers are not bothered by the turmoil in the housing and financial markets. Jay Reyher and his wife closed this month on a custom house in the Malvern area built by Ambassador. Reyher said he started the process a year ago, before the subprime mortgage industry went south and contaminated the overall market.

The chemical industry executive said he realized house prices might be flat or trend down for awhile. "I'm not concerned about it," he said.

High-end custom builders said demand was still decent for expensive homes, but they have had to adjust how they deal with potential buyers. "We will certainly negotiate more than we would have. We don't have buyers standing in line," said Wayne Megill Jr., president of Megill Homes in West Chester.

At T.H. Properties Inc. in Harleysville, which builds primarily for first-time home buyers, there's no sign of a downturn, according to Bob Gollwitzer, the company's director of marketing.

TH Properties' sales climbed to 504 units this year from 444 in 2006, Gollwitzer said. The privately owned company sells townhouses starting at $149,000 and single-family houses starting at $270,000.

On Nov. 30, the company, which builds mostly in Montgomery County, sold 20 units at a new Gilbertsville development, Gollwitzer said.

A couple of home builders said they had purposely managed their business to a smaller size.

Jonathan Wilz, vice president and co-owner of Headley Homes Inc. in Sewell, said the company had decided a couple of years ago not to buy land for a new subdivision because management thought the market was too frothy.

"It's knowing when to jump in and when not to that makes or breaks you in this business," Wilz said.

The company's biggest year was 2003, when it sold 42 houses. This year it sold eight, Wilz said.

As a small company, Headley had the flexibility to compensate for the decline in new-home sales by getting into remodeling, Wilz said. "That business is OK."