It is currently 18 Oct 2017, 17:42

### 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

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

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

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

Author Message
Manager
Joined: 08 Jul 2009
Posts: 172

Kudos [?]: 89 [0], given: 13

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

### Show Tags

05 Aug 2009, 14:10
00:00

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct 0% (00:00) wrong based on 0 sessions

### HideShow timer Statistics

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.

Kudos [?]: 89 [0], given: 13

Intern
Joined: 27 Jun 2009
Posts: 2

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

### Show Tags

05 Aug 2009, 15:31
IMO E
if the mortage rates were to increase later in the year... there is a possibility that people will buy the new houses now.

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

Senior Manager
Joined: 17 Jul 2009
Posts: 286

Kudos [?]: 44 [0], given: 9

Concentration: Nonprofit, Strategy
GPA: 3.42
WE: Engineering (Computer Hardware)

### Show Tags

05 Aug 2009, 17:05
I'm gonna go with A...although there are a large drop in new houses sold due to people waiting for mortages, but new house prices were going up, most likely new houses sold were to ones who were not financially restricted which brings up the average sale price?

Kudos [?]: 44 [0], given: 9

Manager
Joined: 08 Jul 2009
Posts: 172

Kudos [?]: 89 [0], given: 13

### Show Tags

05 Aug 2009, 17:43
OA A

Kudos [?]: 89 [0], given: 13

Intern
Joined: 25 Jul 2009
Posts: 42

Kudos [?]: 4 [0], given: 0

### Show Tags

05 Aug 2009, 20:09
A for me too
The cost of the expensive houses increases the average cost even though the cost of the moderate-low houses fell.

Kudos [?]: 4 [0], given: 0

Manager
Status: Applying
Joined: 19 Jul 2009
Posts: 149

Kudos [?]: 16 [0], given: 6

Location: United Kingdom
Concentration: General Management, Strategy
GPA: 3.65
WE: Consulting (Telecommunications)

### Show Tags

05 Aug 2009, 23:00
IMO A...

THe higher priced houses as the choice explains could contribute to the higher average price.

Kudos [?]: 16 [0], given: 6

Director
Joined: 05 Jun 2009
Posts: 808

Kudos [?]: 373 [0], given: 106

WE 1: 7years (Financial Services - Consultant, BA)

### Show Tags

05 Aug 2009, 23:55
Agree with A.
_________________

Consider kudos for the good post ...
My debrief : http://gmatclub.com/forum/journey-670-to-720-q50-v36-long-85083.html

Kudos [?]: 373 [0], given: 106

Intern
Joined: 15 May 2007
Posts: 23

Kudos [?]: 2 [0], given: 1

### Show Tags

06 Aug 2009, 00:21
+1 for A

Kudos [?]: 2 [0], given: 1

Re: Jan   [#permalink] 06 Aug 2009, 00:21
Display posts from previous: Sort by