Find all School-related info fast with the new School-Specific MBA Forum

It is currently 17 Dec 2014, 11:55

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Average price of new house

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Senior Manager
Senior Manager
avatar
Joined: 02 Dec 2007
Posts: 464
Followers: 2

Kudos [?]: 44 [0], given: 6

Average price of new house [#permalink] New post 07 Sep 2008, 06:48
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.
Which of the following, if true, best explains the sharp rise in the average price of new houses?

A. Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

B. Labor agreements of builders with construction unions are not due to expire until the next January.

C. The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.

D. There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.

E. Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate
Senior Manager
Senior Manager
avatar
Joined: 06 Apr 2008
Posts: 451
Followers: 1

Kudos [?]: 56 [0], given: 1

Re: Average price of new house [#permalink] New post 07 Sep 2008, 07:00
Nihit wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.
Which of the following, if true, best explains the sharp rise in the average price of new houses?

A. Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

B. Labor agreements of builders with construction unions are not due to expire until the next January.

C. The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.

D. There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.

E. Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


IMO A)
Manager
Manager
avatar
Joined: 04 Jun 2008
Posts: 161
Followers: 2

Kudos [?]: 18 [0], given: 0

Re: Average price of new house [#permalink] New post 07 Sep 2008, 07:14
Nihit wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.
Which of the following, if true, best explains the sharp rise in the average price of new houses?

A. Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

B. Labor agreements of builders with construction unions are not due to expire until the next January.

C. The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.

D. There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.

E. Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


A is good.
we have a decrease in the number of medium priced houses that are sold.we see number of high priced houses sold unchanged .hence average price of house should increase.
Senior Manager
Senior Manager
avatar
Joined: 02 Dec 2007
Posts: 464
Followers: 2

Kudos [?]: 44 [0], given: 6

Re: Average price of new house [#permalink] New post 07 Sep 2008, 07:55
nmohindru wrote:
Nihit wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.
Which of the following, if true, best explains the sharp rise in the average price of new houses?

A. Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

B. Labor agreements of builders with construction unions are not due to expire until the next January.

C. The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.

D. There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.

E. Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


IMO A)


Chan > there is no mention of medium houses .
VP
VP
User avatar
Joined: 05 Jul 2008
Posts: 1434
Followers: 35

Kudos [?]: 237 [0], given: 1

Re: Average price of new house [#permalink] New post 07 Sep 2008, 08:09
Nihit wrote:
nmohindru wrote:
Nihit wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.
Which of the following, if true, best explains the sharp rise in the average price of new houses?

A. Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

B. Labor agreements of builders with construction unions are not due to expire until the next January.

C. The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.

D. There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.

E. Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


IMO A)


Chan > there is no mention of medium houses .


Avg = Total price of n number of houses / n

Now number of homes sold are going down (both numerator and denominator on the fall) but the avg is going up. This is possible when the homes that are being sold are high end homes and those who buy them don't care much about IR. Its is possible that only 2 homes (both high end) got sold and the avg price might have shot up by 400K.
Senior Manager
Senior Manager
avatar
Joined: 02 Dec 2007
Posts: 464
Followers: 2

Kudos [?]: 44 [0], given: 6

Re: Average price of new house [#permalink] New post 07 Sep 2008, 08:17
makes sense now , cheers icandy
Intern
Intern
avatar
Joined: 12 Aug 2008
Posts: 49
Location: New York, NY
Followers: 1

Kudos [?]: 0 [0], given: 1

Re: Average price of new house [#permalink] New post 07 Sep 2008, 08:20
IMO 'E'

Since the sales of the new houses is declining becoz the interest rates are going down.

If interest rates increases because of the improved economy, people who were waiting for the interest rate to go up have started to buy the new houses ..... and that created a spike in the prices of new houses.
VP
VP
User avatar
Joined: 05 Jul 2008
Posts: 1434
Followers: 35

Kudos [?]: 237 [0], given: 1

Re: Average price of new house [#permalink] New post 07 Sep 2008, 08:27
amitkaneria wrote:
IMO 'E'

Since the sales of the new houses is declining becoz the interest rates are going down.

If interest rates increases because of the improved economy, people who were waiting for the interest rate to go up have started to buy the new houses ..... and that created a spike in the prices of new houses.


Its contradictory. The stem is saying that number of houses being bought are going down in the same month. If IR were to goo up later, people would be gobbling up the homes on the market right now.

On a diff note, FRE and FNM are gobbled up today by the government. Disastrous Monday for markets tomorrow.
SVP
SVP
avatar
Joined: 17 Jun 2008
Posts: 1577
Followers: 12

Kudos [?]: 195 [0], given: 0

Re: Average price of new house [#permalink] New post 09 Sep 2008, 11:34
Initially, thought of A. But, after looking at icandy's comments, A makes perfect sense.
Director
Director
avatar
Joined: 20 Sep 2006
Posts: 658
Followers: 2

Kudos [?]: 68 [0], given: 7

Re: Average price of new house [#permalink] New post 09 Sep 2008, 11:39
IMO E ... tough one

EDIT : A .. make sense after a close look.. thanks icandy
Re: Average price of new house   [#permalink] 09 Sep 2008, 11:39
    Similar topics Author Replies Last post
Similar
Topics:
15 Experts publish their posts in the topic Tom, Jane, and Sue each purchased a new house. The average reply2spg 16 09 Oct 2009, 22:27
1 Average price andrewng 4 06 Oct 2009, 23:28
Over the last 25 years, the average price paid for a new car gmacvik 17 06 Sep 2006, 15:36
Over the last 25 years, the average price paid for a new car ronybtl 9 08 Nov 2005, 06:30
Tom, Jane, and Sue each purchased a new house. The average trickygmat 5 10 Oct 2005, 21:03
Display posts from previous: Sort by

Average price of new house

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.