New-Home Sales Down
According to the most recent figures released from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, new-home sales dropped 7.0 percent in December to a seasonally adjusted annual rate of 414,000 units. On the positive side new-home sales for all of 2013 were up 16.4 percent over the previous year, this despite December’s sharp decline.
Rick Judson, Chairman of the National Association of Home Builders (NAHB) said, “December’s decline in new-home sales follows elevated levels in the previous two months and means the fourth quarter was still much stronger than the third. While we expect sales to gain strength in 2014, builders still face considerable constraints, including tight credit conditions for home buyers, and a limited supply of labor and buildable lots.”
By region the Northeast, had the largest drop in new-home sales in December, “plummeting” 36.4 percent to the slowest pace since June 2012. Extreme cold weather for the month clearly had had an impact on sales. New-home sales also dropped in the West, falling by 8.8 percent, falling also by 7.3 percent in the South, while they rose 17.6 percent in the Midwest.
The supply of new homes on the market in December dropped 2.8 percent, the lowest figure since July, while “settling” in at a five-month supply. Analysts generally consider a six-month supply of homes for sale healthy for the market.
Chief economist for the National Association of Home Builders (NAHB), David Crowe stated, “Consumers are getting used to more realistic mortgage rates, which still remain favorable on a historical basis. As household formations and pent-up demand continue to emerge, we anticipate that 2014 will be a strong year for housing.” The NAHB says that the rise in mortgage interest rates beginning earlier last year may have hampered sales.