Sales of new homes hit 2-year high
The shrinking inventory of used homes may be increasing demand for new construction. But the sales rate still remains barely half of normal.
Sales of new single-family homes rose 7.6% in May, to the highest rate in two years, but remained far below the number of new-home sales that constitute a normal market.
At the May rate, builders could expect to sell 369,000 single-family homes this year, compared with the 700,000 that would indicate a normal market, according to data from the Commerce Department.
"The relatively strong increase in new-home sales this May is an indication that more potential homebuyers are being drawn to the market by today's excellent mortgage rates as well as firming conditions in some local economies," Barry Rutenberg, chairman of the NAHB and a homebuilder from Gainesville, Fla., said in a news release.
Post continues below
One factor that may be spurring the sale of new homes is the shrinking inventory of used homes for sale in many cities. The shortage is especially acute in lower price ranges.
The median price of a new home in May was $234,500, which was 5.6% higher than at the same time last year. Builders also sought more permits to build new homes in May than they had sought in 3 1/2 years. The current inventory of new homes for sale would sell in 4.7 months at the current sales rate, and a six-month supply is normally considered healthy.
Regionally, the picture varied considerably. Sales rose 36.7% in the Northeast and 12.7% in the South, but fell 10.6% in the Midwest and 3.5% in the West.
Despite the improvement in the statistics, the construction industry still has a long way to go,
"I’m not buying into the proposition that the nation’s construction industry will recover in 2013," Anirban Basu, chief economist of Associated Builders and Contractors, said in a news release last week. "What we have right now is an utter lack of confidence in the economy, and confidence represents a centrally important requirement for construction spending growth."
I live in rural Texas, just south of Abilene. Houses have been selling fairly well here, you might call them fixer uppers. The average price range is $15-$50k (1940 -1960 vintage) some are in pretty desent shape. I asked some of the recent buyer what possessed them to move here, cheap housing, cheap repair cost and I paid ca**** mine. Screw the bank and the mortgage, if things get rough, I will still have a roof and can pick up enough odds and ends to pay taxes & utilities.
If you are looking for government handouts, this is the place to be and drugs are in an abundance supply of what ever you want. The Local PD will direct you to the nearest dealer. If you actually want to work , there are plenty of jobs if you are clean.
Move to our town, Life at a different Pace. Tell them EDC sent you.
Investors here in Tucson and Phoenix are now buying up new homes to use as rentals. Still have friends working at new home sites and all of them have said investors are coming in now and buying. Some of them 2 to 3 at a time, sound familiar.....? We just never learn our lesson apparently this will turn into another bubble since most of these fudged numbers are due to investors and not real families anyway. SO NO, even though news agencies run a "look how good the housing market is" article every week, I'm not buying it. The next crash is going to be more painful then anyone can imagine. Sad....
This is bullcrap!! Just a number estimated to fool the public on economic recovery. Still there are those who are stuck with underwater loans. Also something news in the as we get closer to election time.
Vote (C) None of the above.Remember the movie in which the great Richard Pryor played?
Its not hard to believe that homes that in desirable areas are selling and for more than asking price. People if you live in a neighborhood where you have a lot of foreclosures and they are not getting snatched up its because no one wants to live there. An investment is a gamble.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.