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# In January there was a large drop in the number of new

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In January there was a large drop in the number of new [#permalink]

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24 Dec 2007, 03:25
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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.

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Director
Joined: 26 Mar 2006
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24 Dec 2007, 06:02
tarek99 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.

Go for 'A'

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Manager
Joined: 26 Feb 2007
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24 Dec 2007, 15:47
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. strengthen the argument

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

(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing. doesn't strengthen the argument about sharp rise

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

(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. not related directly

so I would go with A

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Senior Manager
Joined: 06 Jul 2007
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24 Dec 2007, 17:47
tarek99 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.

I would go with A because of the reasoning already provided.

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SVP
Joined: 21 Jul 2006
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25 Dec 2007, 02:45
OA is A

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VP
Joined: 22 Nov 2007
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01 Jan 2008, 22:39
tarek99 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.

B. out of scope
C. irrelevant
D. irrelevant
E. a mere expectation doesn't mean anything

A. is correct: if sales drop in general but sales of high-priced houses doesn't drop, prices mathematically rise

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Manager
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05 Jan 2008, 12:38
When an average of two group one small amount and other with big amount rise.. There could be only 2 explanation...

small amount group decreases

OR

large amount group increases...

In this particular case large amount group being constant and small amount houses got a pause therefore overall increasing the average of each house sold...

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Re: CR: House Sales   [#permalink] 05 Jan 2008, 12:38
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# In January there was a large drop in the number of new

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