Good News for New Home Sales
The latest data from HUD (Housing and Urban Development) and the U.S. Census Bureau shows that sales of new homes has hit that highest monthly level since April 2010, the month when the federal home-buyer tax credit expired.
According to the above data sales of new single-family homes increased 4.4 percent in November, reflecting a seasonally adjusted annual rate of 377,000 units. If these numbers continue they could help substantiate projected new single-family home sales for the year.
The National Association of Home Builders (NAHB) is projecting new-home sales to finish the year at 365,000 units sold. David Crowe, Chief Economist for the NAHB, says the 365,000 projected units sold for this year would be a 20 percent increase over levels for 2011.
Crowe goes on to say that the coming year (2013) should see “similar” gains. The key factors in the improving market for sales are rising home prices, low mortgage interest rates and an improving economy. He adds that these factors will help motivate home buying consumers to “stop sitting on the sidelines” and get into the market.
Looking at the market figures for November, the statistics show two regions with new-home sales increases and two with decreases. According to the regional data the South had a new-home sale increase of 21.1 percent, while the Northeast had gains of 12.5 percent. Sales for new-homes decreased in the Midwest by 12.5 percent as the same sales dropped 17.8 percent in the West.
Another important figure for new-home sale market health is the inventory of unsold new homes. The November data shows that the inventory of unsold new homes rose slightly to 149,000 units, which is a 4.7month supply of available homes, if sold at the current rate.
The historic norm for this inventory figure is a 4.5 months supply of unsold homes. The current figure of 4.7 months is radically lower than January 2009 when there was a 12-month supply of unsold new homes.
Crowe cautions that the one caveat to any further growth in the housing market could be the current negotiations going on in Congress relative to the “fiscal cliff.” We will have to wait and see as to that outcome.