September 23, 2021

New-Home Sales Decline To a 6-Month Low Rate

A stagnant job market and a big overhang of unsold existing homes have combined to keep new-home sales low even as mortgage rates returned to lows not seen since at least the early 1970s.

New-home sales slipped 2.3 percent last month to a 295,000 annual rate, a six-month low, the Commerce Department said on Monday. That was in line with analysts’ forecasts and did little to allay fears that the United States could slip back into recession.

The median sales price also moved lower from the previous month and was 7.7 percent below year-ago levels.

“There’s no sign yet that low mortgage rates are helping the housing sector,” said Gary Thayer, a strategist at Wells Fargo Advisors in St. Louis.

The Federal Reserve last week announced new measures to ease credit further for home buyers, but analysts cautioned that the level of mortgage rates was not the main hurdle to buying.

Heavy debts taken on during the housing boom in the previous decade are also making consumers cautious to spend.

In its monthly report on single-family home sales, the government raised its estimate for July’s sales pace slightly to 302,000 units. Also, the supply of homes available on the market in August dropped to a record low.

Data last week showed new construction of homes fell in August, dragging on economic growth.

“The housing sector can’t get any worse,” said Michael Englund, an economist at Action Economics in Boulder, Colo.

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Shortcuts: Avoiding the Misery of Remodeling by Choosing the Right Contractor

Then, we did everything you’re not supposed to when planning construction. We hired a contractor who had previously worked on our apartment building without checking references. We had no idea if he was licensed. We started the project when I was six months pregnant.

Still, despite some setbacks, the project was finished on time. In fact, the living room floors were being varnished when I was in the hospital giving birth. The place looked good, and we even received a baby present from Dave, our contractor.

Dumb luck. And dumb might be the operative word here. As more people are turning to remodeling instead of moving — and with the decline in new construction meaning more eager contractors to chose from — it makes sense to know how to choose a general contractor.

“People shop for cars more carefully than contractors,” said Mario Barbuto, who has been a general contractor for the last 25 years in the New York area.

A remodeling experience gone wrong can make your life hell. Patricia Maier, a retired teacher, signed a contract in July 2008 for an addition to her house in Lexington, Mass., which was built in 1884.

Almost three years later, she is still coping with a job that was supposed to take four months. She hired an architect who was the husband of a colleague and used a general contractor he suggested.

The builder quickly did much of the exterior work, then took a 10-day trip to the Caribbean. Things never got back on track. Newly installed floors warped, were reinstalled and warped again. French doors that had been put in weren’t sealed correctly. Gutters didn’t drain properly. The architect dropped out of the process.

“Things looked good superficially but there were so many problems,” she said. Now Ms. Maier is seeking redress through various state offices.

“Never hire a friend,” she said, referring to the architect. “It will always backfire.”

Do you even need to hire a general contractor?

No, said David M. Dillon, a general contractor based in Dallas. Any competent person can oversee construction, he said. But if several subcontractors are involved, a lot of time will be spent by a homeowner managing details and personalities.

Should you decide you want a general contractor to run your project, how do you find one?

Word of mouth is always a good option, as is contacting your local government’s public works and building departments.

“They’re full of opinions about who is good and who is not. They’re looking at their work every day,” said Mr. Dillon, who has self-published a book this year called, “Homeowners, It’s Time to Think Like a General Contractor.” (CreateSpace, $7.99)

Online referral sites are another option to find contractors. Some are free, but Angie’s List, which is one of the better known, charges membership fees. The cost starts at under $10 a month, and opinion online is divided on how good these sites are.

After narrowing down a list, what do you do? Most people would say ask for references and photos of previous work, but that’s just the beginning. References are important, but how do you know they’re genuine customers? Web site photos are nice, but a lot can be hidden.

So it is much more important to ask to physically see work that has withstood the test of time.

“I show jobs that are six or seven years old, because new jobs always look good,” Mr. Barbuto said. And he’s happy to ask former customers if he can do a walk-through for potential clients.

“After all, everything looks pretty in a picture,” he said.

When visiting a completed project, take the time to talk to the owners there and get a sense of how happy they were with their contractor.


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Stocks Open Lower on Poor Outlook From Hewlett-Packard

Hewlett- Packard lowered its earnings outlook for the rest of the year because it expects weaker personal computer sales. H.P.’s stock fell more than 6 percent in early Tuesday trading.

Home Depot and Wal-Mart Stores also reported results Tuesday. Wal-Mart said its profit rose 3 percent in the first quarter, but sales at stores open at least a year fell for the eighth quarter in a row.

Home Depot said net income jumped 12 percent in the first quarter, but sales slipped.

In early trading, the Dow was down 46.77 points, or 0.4 percent, to 12,501.60. The Standard Poor’s 500-stock index was flat, at 1,328.75 points. The Nasdaq composite was down 3.68 points, or 0.1 percent, to 2,778.63.

In economic data, the Commerce Department said Tuesday that housing starts and permits for new homes both fell in April as a surplus of new homes remained on the market and discouraged new construction.

The Federal Reserve said industrial output fell in April as the earthquake in Japan interrupted the supply of parts needed for auto construction.

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