Sale of new homes remain on upswing
Saturday, 25 February 2012 | 00:00
Lured by low prices and warm weather, more Americans went shopping for new homes in January and December, government data showed Friday.
The sale of new single-family homes in the U.S. fell slightly in January, but only because sales in December were revised higher. Taken together, sales in those two months were the strongest in a year, a good sign for a market that’s been in a deep slump since the 2007-2009 recession.
New home sales totaled 321,000 in January on an annualized basis, compared to 324,000 in December, the Census Bureau reported Friday. Economists surveyed by MarketWatch had forecast sales in January to total 315,000.
Sales for December were revised up from an original reading of 307,000. The increase that month was the biggest since December 2010.
Rising sales of new homes dovetails with other data that suggests the real-estate market is showing signs of life.
The report “fits nicely with other housing indicators that are showing the housing market dusting itself off and slowly rising up off of the bottom,” economists at RBS wrote
More than half of all the new home sales took place in the South — 188,000 on an annual basis. Sales in the West totaled 76,000, but that was down 10.6%.
Sales in the Midwest rose to an annual rate of 49,000 from 37,000 in December, while sales in the North dipped to 18,000 from a 20,000 rate.
The median sales prices, meanwhile, edged up to $217,500 from $216,500 in December, but the cost of new homes are still near the lowest level in eight years.
The supply of new homes on the market fell to 5.6 months, the lowest amount in six years. And the actual number of new homes available for sale slid to a record low of 151,000.
New home sales are 3.5%% higher compared to one year ago, however.
Data for new-home sales often fluctuate sharply from month to month and economists look at a longer time frame to gauge market trends. Seen from that perspective, new-home sales averaged 321,000 during the three-month period of November to January, compared to 309,000 for the same period a year ago.
The increase stems in part from unusually warm winter weather, but low prices and an improved economy have helped. Still, the housing market has a long way to go before it emerges from its worst slump in the modern era.
In good times, the rate of new home sales is around 1 million annually and the market constitutes an important part of the economy. Yet the sale of new homes has played a smaller role in the economy since the last recession, accounting for less than 7% of all homes now sold each year.
Many price-conscious house hunters have been looking for used homes, especially foreclosed properties selling at distressed prices well below the cost of new houses.
The number of foreclosed properties on the market, what’s more, is expected to jump sharply in coming months, potentially keeping a lid on the sale of new homes despite the market’s recent improvement.