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 Let's hope the prospects of owning a home in 2010 provides us with a better investment return than it did in 2009. The United States economy continued to struggle last year, and the average price for a home decreased to $270,400 in 2009, a decline of 7.6% from the average home price of $292,600 in 2008.
In this publication, we're going to summarize some of the home sale information gathered by the Census Bureau and the U.S. Department of Housing and Urban Development. That review will include the numbers of homes sold in 2009, as well as the number of homes for sale at the close of the year. We're also going to summarize some of the 2009 data into tables, including the percentage of new home sales by sales price. This is the same approach we've taken in previous years.
Average Home Price
Throughout this publication, we're going to be providing 2009 statistics relating to new home prices, sales of homes, and homes for sale. This information is based on surveys conducted by the two U.S. government agencies mentioned earlier, and as is the case with all surveys, there are limits to the accuracy of the survey itself.
To help better understand meaningful changes, when making comparisons between the years 2008 and 2009, we will indicate if a change was not statistically significant. Please note that as new information is gathered, there may be some recasting of values published in prior months or years. For example, some of the 2008 home values described herein may be slightly different than the values published in last year's article.
New Homes Sold in 2009
There were approximately 374,000 new homes (single family) sold in the United States during the 2009 calendar year. That's a decrease of 22.9% from the 485,000 home sold in 2008, and a 51.8% decrease from the 2007 volume of 776,000. In December 2009, the annualized rate of new home sales was 342,000, which is nearly identical to the December 2008 value of 344,000.
In 2009, the United States housing market experienced a somewhat typical pattern of new home sales each month. Volume grew steadily into the summer months, and then activity slowed down as the fall and winter months approached.
Homes for Sale
At the close of 2009, there were approximately 234,000 new homes for sale in the United States. Since we also know the December annualized rate of sales was 342,000, we can conclude that at the end of 2009 there was over an eight-month supply of new homes for sale. From this information, we know that, on average, it would take over eight months to sell a home that was for sale at the end of 2009.
This value is calculated by taking the homes that were for sale at the end of the year (234,000) and dividing it by the December annualized rate of sales (342,000), and then multiplying the resultant percentage (68.4%) times 12 months (8.2 months).
The new home sales data also tells us that in 2009, the median number of months it took to sell a home, once its construction was completed, was 13.9 months. In 2008, the median number of months to sell a new home was 9.2, while in 2007 that value was 6.2 months. The median is the mid point in any data. So this data tells us that 50% of the new homes took less than 13.9 months to sell and 50% took more than 13.9 months to sell.
This data also tells us that from 2007 through 2009, the time it took to sell a new home increased around 125%: from 6.2 months to 13.9 months. Back in 2006, that value was reported to be 4.3 months. So it's clear that the slowdown in the economy is reflected in the time it takes to sell a home. We're experiencing a 223% increase in the time it takes to sell a home in 2009 when compared to the housing market before the recession began.
New Home Prices
The average price of a new home sold in 2009 was $270,400, which represented a statistically significant decrease from the 2008 value of $292,600. The median price of a new home sold in 2009 was $215,900, which was also a statistically significant decrease from the 2008 value of $232,100.
With the economic recession in its second full year, it is easy to understand why we're seeing new home prices continuing their decline in 2009.
Distribution of New Home Prices
The last bit of information we'll extract from this survey has to do with the distribution of new home prices. The table below illustrates the range of new home sales prices for the calendar years 2004 through 2009.
Percentage of New Home Sold by Price
| New Home Sales Price |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
| < $150,000 |
22% |
18% |
15% |
14% |
16% |
18% |
| $150,000 - $199,999 |
21% |
19% |
20% |
21% |
22% |
26% |
| $200,000 - $299,999 |
26% |
28% |
28% |
29% |
31% |
30% |
| $300,000 - $399,999 |
14% |
16% |
17% |
16% |
14% |
12% |
| $400,000 - $499,999 |
7% |
9% |
8% |
8% |
7% |
6% |
| $500,000 - $749,999 |
7% |
8% |
8% |
8% |
6% |
5% |
| > $749,999 |
3% |
4% |
4% |
4% |
4% |
3% |
From the above table we can draw the following conclusions about historical new home prices:
- When comparing 2008 to 2009, we continue to see a decrease in the percentage of new homes selling for more than $300,000 (31% in 2008 versus 26% in 2009).
- When comparing 2007 to 2009, we see an even larger decline in the percentage of new homes selling for more than $300,000 (36% in 2007 versus only 26% in 2009).
- In 2009, just about 75% of all the new homes purchased in the United States were sold for less than $300,000.
- Over the last six years, the most popular selling range for new homes was $200,000 to $299,000.
- In 2009, only 8% of new homes sold for more than $500,000. This is the lowest percentage rate for homes in that price range over the six years of data we're reporting.
About the Author - Average Home Prices 2009
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