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New Home Sales Plunge, Policy Snafu to Blame?

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Yesterday's data that sales of existing home sales spiked in November may be overshadowed by today's news regarding new home sales. Via Builder magazine: "Sales of new homes plummeted 11.3% in November compared to the previous month, according to data released Wednesday by the U.S. Census Bureau." But according to CNN, the drop may be due to changes to the $8,000 home buyer's tax credit. "Buyers who were rushing to make a purchase ahead of the tax credit's Nov. 30 deadline were given a reprieve -- and more time to shop around -- when it was announced on Nov. 6 that the credit would be extended to April 30, 2010." And the New York Times also notes the extension of the tax credit deadline, quoting some experts who believe "the decline may simply be a hiccup that resulted from a confusing policy debate in Washington." Meanwhile, to understand the difference between new home sales data and existing home resale data, we turn to the Associated Press: "New home sales data, released Wednesday, are a better indicator of future real estate activity than sales of previously occupied homes, but capture a smaller slice of the market. The new home figures tally sales agreements signed in November, while home resale numbers reflect contracts signed over the summer that were completed the same month."
· For 2 Economic Pillars, Uncertain Roles in Recovery [NY Times]
· Sales of New Homes Dive 11.3% in November [Builder Mag]
· November new home sales sink 11 percent [AP]