Builders suffered some major whiplash earlier this summer when the first-time homebuyer tax credit ended. We all knew that sales would fall off from the scurrying to buy last fall and earlier this spring, but no one expected new home sales to fall off a cliff. Luckily for builders, sales were able to recover quickly in June.
First, let’s look at how ugly May was. Shobana Chandra and Timothy R. Homan of Bloomberg News gave us some amazing numbers. New home sales dropped 33%, to an annual pace of 300,000, “the fewest in data going back to 1963, figures from the Commerce Department showed…” As reported in the article, the Fed has been doing everything they can to keep rates down, otherwise things would have been worse (if that was possible).
But what goes down, must come up and the news in June was brighter. Courtney Schlisserman also of Bloomberg wrote that new home purchases rose 24 percent in June as the annual pace of sales rose to 330,000. All areas in the US saw a sharp increase in new home sales, except the West. It actually experienced a drop of 6.6 percent from May.
New home sales skyrocketed in March by 27%, the biggest increase since 1963. Courtney Schlisserman and Bob Willis of Bloomberg said that the annual pace of new home sales stood at 411,000, per the Commerce Dept.
Quoting, “The jump in sales brought the number of new houses on the market down to 228,000, the fewest since March 1971”. That’s great news regarding bringing down inventory of new homes, but there is still the danger of shadow inventory (see foreclosures) going on the market that would put pressure prices low. Bad for sellers, but good for buyers.
Alex Viega of the Assoicated Press reported recently that the National Association of Homebuilders housing market index moved up to 19, the best number it’s had since September 2009.
Viega said that builders were feeling the affect of the Federal homebuyers credit. They feel that it has helped them in recent months to clear their inventory, which has been difficult to do since the new construction has had compete with all of the foreclosures that have been flooding the market over the last few years.
He goes on to add that as good as the builders are feeling now, they are nervous about the near term. With the tax credit ending and foreclosures climbing, many feel like the recent gains will be reversed.
Alan Zibel of the Associated Press said late last month that Februrary new home sales fell to a record low, blaming it in part to harsh winter conditions that kept buyers away.
According to Zibel, “Sales fell 2.2 percent last month to a seasonally adusted annual sales pace of 308,000, the Commerce Department said Wednesday.” Records on new home sales have been kept since 1963. Sales were based on signed sales contracts, not closed sales.
The bright spot is that sales in the West actually rose by 21%.
Zibel also said that the median sales price climbed on a monthly and yearly basis, up 5% from the previous year and 6% from January. The median sales price rose to $220,500.