2011 Marks Worst Year on Record for New-Home Sales

Sales of new-home declined in December, dropping 2.2 percent, and marking the end to the worst year on record for new-home sales, the Commerce Department reported Thursday.

New-home sales reached a seasonally adjusted annual pace of 307,000 in December — less than half the 700,000 pace that economists consider healthy for the sector.

In 2011, 302,000 new homes were sold nationwide, overtaking 2010’s 323,000 sales that had previously marked the worst year for sales on record.

The new-home sector continues to struggle to compete against discounted distressed properties that are plaguing many markets and have put downward pressure on home prices. Builders also say tighter lending standards are preventing some home buyers for qualifying for financing, and appraisals of new-homes are coming in lower on the agreed upon purchase price, causing more deals to fall through.

In December, the median sales price of a new-home was $210,300, according to the Commerce Department.
Turnaround Coming?

Despite the latest numbers from December, new-home sales rose in the overall final quarter of 2011. Home construction for single-family homes increased in the final three months of 2011, and an index measuring homebuilder sentiment showed builders are more positive about where the market is heading too.

“Although this [December] decline was unexpected, it does not change the story that housing has likely bottomed,” Jennifer H. Lee, senior economist at BMO Capital Markets, told the Associated Press.

Source: “New Home Sales 2011: Worst Year on Record,” Associated Press (Jan. 26, 2012)

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New-Home Sales Post Biggest Gains in Months

New-home sales for single-family homes rose 1.3 percent in October, marking the best pace for new-home sales activity since this May, the U.S. Commerce Department reports.

Following the sector’s worst year for new-home activity on record last year, several recent reports are suggesting a pick-up in new construction.

“Builders have been seeing some marginal improvement in sales activity over the past few months, particularly in select markets where consumer confidence is higher due to improved economic conditions,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “While this trend is encouraging, overall sales activity is still well below normal due to the effects of overly tight credit conditions for builders and buyers, the continued flow of distressed properties on the market, and inaccurate appraisal values on new homes.”

Despite the October gain in sales, new-home sales for the month were at an annual rate of 307,000–still less than half the 700,000 in sales that most economists consider healthy for the housing market.
A Regional Look

A break down of sales by region in October:

Midwest: Rose 22.2 percent
West: Rose 14.9 percent
Northeast: Stayed flat
South: Declined 9.5 percent

Inventory Drops Drastically

Nationwide, the inventory of new homes for sale stayed at an all-time record low of 162,000 units in October.

“Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply,” NAHB Chief Economist David Crowe said in a statement.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

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Home Builders are Predicting a Sales Comeback

New-home sales may bounce back this spring, and the rebound could last through at least 2012, predict market watchers.

The Mortgage Bankers Association forecasts a 10 percent jump in volume; while Fannie Mae and the National Association of Home Builders project gains of 18 percent and 20 percent, respectively.

The groups are optimistic despite tighter underwriting, the absence of a home buyer tax credit and stiff competition from bargain-priced foreclosure properties.

Source: “New-Home Recovery Seen as Post-Super Bowl Selling Season Starts”
Business Week (02/11)

New Home Sales Surge

New single-family home sales in December rose to their highest level in eight months and prices were the highest since April 2008, raising cautious optimism for a housing market recovery.

The Commerce Department said sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit pace in November. Economists polled by Reuters had forecast new home sales rising to a 300,000-unit pace in December from a previously reported 290,000 unit rate. Compared to December a year earlier, sales were down 7.6 percent. Overall 2010 sales dropped 14.4 percent to a 321,000-unit rate.

Economists saw the gains as significant.

“Clearly we are seeing stabilization in new home sales and this data suggests some upward momentum that we have seen in existing home sales. What is important to realize is even in a period of softer new home sales, inventory continues to decline, said Dean Maki, chief U.S.. economist with Barclays Capital in New York.

“The level of inventory is at its lowest since the 1960s,” Maki said. This suggests the big declines in housing starts are now behind us and housing starts should be on a gradual trend in 2011.”

Brian Bethune, an economist with HIS Global Insight in Lexington, Mass added: “It’s meaningful to the extent that there is a pattern of numbers showing increases. It’s a sign that there is a turnaround. Things are definitely perking up, but there is a question whether it’s sustainable.

Read the latest report from the National Association of REALTORS®: December Existing-Home Sales Jump

Source: “New Home Sales Surge in December,” Reuters(Jan. 26, 2011)

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New-Home Sales Slide

Sales of new homes took another dip in October, sliding 8.1 percent to a seasonally adjusted annual rate of 283,000, the U.S. Department of Commerce reported last week. New-home sales are down 28.5 percent compared to October 2009.

The pace was inconsistent across the country with sales in the South rising 3.1 percent, while sales in the Northeast fell 12.1 percent. They fell 20.4 percent in the Midwest and 23.9 percent in the West.

The media sale price for a new home declined 9.4 percent to $194,000 compared to last year and was just $800 higher than it was in October 2003. The inventory of new homes for sale slid 0.5 percent to 202,000, an eight-month supply. A six-month inventory is considered good.

Source: The Wall Street Journal, Meena Thiruvengadam and Jeff Bater (11/24/2010)

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New-Home Sales Rise; Builders See Stabilization

Sales of new homes rose 6.6 percent in September to a seasonally adjusted annual rate of 307,000, the U.S. Commerce Department said Wednesday.

Sales have been on the increase for two months, although year-over-year, new-home sales in September were down by 21.5 percent. “After dropping precipitously following the expiration of the first-time homebuyer tax credit, it looks as though new home sales have stabilized,” said Nicholas Tenev, an economist at Barclays Capital. “We expect a gradual recovery over the coming months.”

Meanwhile, the National Association of Home Builders on Wednesday cut its 2010 forecast for single-family home construction, but predicted that home building will begin to recover in 2011 and 2012.

Source: MarketWatch, Steve Goldstein and The Wall Street Journal, Jeffrey Sparshott (10/27/2010)

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New Home Sales Fall to 37-Year Low

Sales of new homes fell 12.4 percent in July to the lowest level since the government started keeping records in 1963, the U.S. Commerce Department reported Wednesday.

Single-family home sales fell to a seasonally adjusted annual sales rate of 276,000 units, a 32.4 percent drop from June.

The median sale price for new homes in July was $204,000, a 4.2 percent decline from June, and a 2.9 reduction from July 2009, according to Commerce.

New-home inventory at the end of July was 210,000, a 9.1-month supply at the current sales pace.

Source: The Los Angeles Times, Alejandro Lazo (08/26/2010)

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New Home Sales Climb in June

The housing slump caused by the end of the tax credits may be over, with sales of new homes rising 24 percent in June compared to May to an annual rate of 330,000, the U.S. Commerce Department reported Tuesday.

Nevertheless, sales were at their second-lowest rate since 1963 – May’s were the lowest.

“The future is going to be dependent on job growth. There’s no demand because confidence is weak and employment is weak,” says Eric Green, chief market economist at TD Securities Inc. in New York.

Source: Bloomberg, Courtney Schlisserman (07/26/2010)

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Housing Woes Threaten Economy

Economists said May’s decline in home sales may weaken an already tepid economic recovery.

New-home sales tumbled 33 percent last month, the biggest drop on record, according to the U.S. Commerce Department.

“If there is a sharp decline not only in housing sales but in housing prices, that could threaten a recovery,” says Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia.

“A tepid economic recovery — that’s what we’re going to get, because housing is only very slowly going to return to normal,” says Edward Leamer, an economist at the University of California, Los Angeles, and director of the UCLA/Anderson Business Forecast. “We’ve had a medicated market because of the tax credit and the meds have been removed, so it’s going to be difficult to sell homes in the next few months.”

“This is a recession that was induced by housing, and housing is not going to carry us out like it has done in the past,” says Diane Swonk, chief economist of Chicago-based Mesirow Financial Holdings Inc.

Source: Bloomberg, Kathleen M. Howley (06/23/2010)

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Builders Report Improving Spring Sales

Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.

JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.

Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.

Source: Associated Press (06/07/2010)

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