From the WSJ Real Time Economics Blog:
The market for higher-end homes took an especially strong blow in August as a result of the credit crunch: Sales of new homes priced above $500,000 dropped by more than a third in the latest government figures.
Today’s report on new-home sales show that 68,000 new homes overall were sold during the month, down from 74,000 in July (and off 22% from a year earlier). Sales of new homes priced at $500,000 or more plummeted: 6,000 were sold in August, after 9,000 for each of the previous three months (and 11,000 a year earlier).
The credit market turmoil, spurred by the subprime-market meltdown, has sent rates higher for “jumbo” loans — those $417,000 or more — and blocked many consumers out of mortgages. Lower demand is expected to push prices down even further for higher-end homes, whether new or previously owned. That means larger spenders “will pay a price as the housing market continues to unwind” and could hit consumption growth especially hard, says Joseph Brusuelas, chief U.S. economist at IDEAglobal.