New home sales jump, but median prices fall

Sales of new homes jumped substantially in April. The jump in sales was the largest in 14 years, though the median price of a new house dropped by the largest amount on record. Many around the country welcome this news and stabilization in the real estate market.

From March to April sales of single family homes jumped 16.2 percent but the median new home price declined a record 11.1 percent. The drop in price was needed. Home prices need to be tied to affordability. In many parts of the country, including Sarasota, the market became overheated by speculators and home prices were unrealistic and unsustainable. Now prices are dropping and getting more in line with what people earn. The Sarasota real estate market has gone through a cleansing process and we may currently be at an equilibrium. Prices could soften a little more but I don't think it will be dramatic. If you are currently a buyer and find the right house with a realistic seller I don't think you will gain much by waiting.

"We've hit bottom. This is it," said Lee Wetherington, president of high-end home builder Lee Wetherington Cos. "From here on out, it's going to be more positive." Wetherington said that the national report reflects what he is seeing in prices and sales in this region. His Lakewood Ranch company's sales have risen by about 20 percent this year. But Wetherington Cos. cut its prices by 20 to 25 percent overall since the market softened.

Pat Neal, president of Lakewood Ranch-based Neal Communities, has seen similar changes in the market."Our May results are better than May of 2004, 2005 and 2006," Neal said. "We've sold 14 homes this month with an average price in the high $500,000s."