Nationally: Inventory Drought Pushes New-Home Sales to 9-Month Low

Inventory Drought Pushes New-Home Sales to 9-Month Low
National Association of Home Builders | August 24, 2018

House 1059The shortage of homes for-sale continues to depress sales. Sales of newly built, single-family homes dropped last month and are now at the lowest level since last October, the Commerce Department reported Thursday. This follows on the heels of the National Association of REALTORS®’ report earlier this week that showed existing-home sales also dipped in July, reaching their sluggish pace in more than two years.

“A lack of overall housing inventory is pushing up home prices, which is hurting affordability and causing prospective buyers to delay making a home purchase,” says Randy Noel, chairman of the National Association of Home Builders.

New-homes sales were at a 627,000 rate in July, about 1.7 percent lower than June sales. However, sales are now 7.2 percent higher than a year ago.

“Although this month marks the lowest sales pace since last October, we continue to see solid housing demand due to economic strengthening and positive demographic tailwinds,” says Danushka Nanayakkara-Skillington, NAHB’s senior economist. “Builders need to manage rising construction costs to keep their homes competitively priced for the newcomers to the housing market.”

The median price of new homes was $328,700 in July, which is 1.8 percent higher than a year ago.

Regionally, new-homes sales were up in the West (10.9 percent month-over-month) and the Midwest (up 9.9 percent month-over-month). However, those gains could not offset a 52.3 percent decline in the Northeast and a 3.3 percent drop in the South last month. “Year-to-date, sales in the Northeast are down 14.5 percent as the region deals with the impact from tax reform and persistent affordability issues,” NAHB notes in its release.

The slowdown in housing is getting the Federal Reserve’s attention, as reflected in the minutes of the central bank’s last meeting, which was released this week. Ward McCarthy, Jefferies LLC economist, noted:

“Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters—hurricanes and wildfires—that forced displaced households to seek alternative housing. The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code. That is the bad news. The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates. We also note this is not the first temporary slowdown in housing activity this cycle.”

Source: “New-Home Sales Sink to a 9-Month Low as Housing Market Wobbles,” MarketWatch (Aug. 23, 2018) and National Association of Home Builders; REALTOR® Magazine 082418

Nationally: New-Home Sales Jump to Highest Level of 2018

Nationally: New-Home Sales Jump to Highest Level of 2018
National Association of Home Builders | June 26, 2018

The month of May saw a record number of new-home purchases. Sales of newly built single-family homes increased 6.7 percent in May to a seasonally adjusted annual rate of 689,000 units, the Commerce Department reported Monday. It marks the highest number of new-home sales of the year and the second highest in sales since the Great Recession.

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“Sales numbers continue to grow, spurred on by rising home equity, job growth, and reports of a greater number of millennials entering the single-family housing market,” says Randy Noel, chairman of the National Association of Home Builders.

The inventory of new homes for sale was 299,000 in May—a 5.2-month supply at the current sales pace. The median sales price for a new home last month was $313,000.

“We saw a shift to more moderately priced home sales this month, which is an encouraging sign for newcomers to the market,” says Michael Neal, the NAHB’s senior economist. “Since the end of the Great Recession, inventory has tracked the pace of sales growth. While we expect continued gains in single-family housing production, inventory may be partially constrained by ongoing price increases for lumber and other construction materials.”

New-home sales posted the largest increase in the South last month, rising 17.9 percent month over month and reaching a post-recession high. Sales remained unchanged in the Midwest, while sales fell 10 percent in the Northeast and 8.7 percent in the West.

Source: National Association of Home Builders; REALTOR® Magazine Online 062618

The West, South Lift New-Home Sales

The West, South Lift New-Home Sales
National Association of Home Builders
article by Daily Real Estate News | April 25, 2018

House 1043Builders saw more sales of newly built single-family homes last month, as the spring selling season got underway. New-home sales posted a 4 percent increase in March month over month, the U.S. Commerce Department reported Tuesday. New single-family homes reached a seasonally adjusted annual rate of 694,000 units in March, the second highest reading since the Great Recession. The West and South regions of the U.S. led to most of that uptick.

“We saw sales move forward in the West and South regions, which is in line with recent evidence of faster growth in population, employment, and single-family construction in these areas,” says Michael Neal, senior economist for the National Association of Home Builders. “But with nationwide economic growth and favorable demographics, we can expect continued strengthening of the housing market across the country.”

New-home sales rose 28.3 percent month over month in March in the West and were up by 0.8 percent in the South. Sales plunged 54.8 percent in the Northeast and by 2.4 percent in the Midwest. Bad winter weather has been blamed on softening sales in the Northeast in recent weeks.

Nationwide, the median sales price of a new home sold was $337,200 in March. Inventories remain tight at a 5.2-month supply at the current sales pace.

While new-home sales gained some ground last month, economists say that construction in the sector is still not robust enough to catch up to buyer demand. The low inventories of homes for sale—in both the new and existing-home sectors—are prompting prices to soar. The S&P/Case Shiller national index, reflecting February data, showed home prices rising to a near four-year high. National Association of REALTORS®’ median home price data also shows gains of about double the average wage growth.

“Even as the tightening job market is starting to boost incomes, those looking to buy are facing a double whammy of fast rising home prices and higher mortgage rates,” says Lawrence Yun, NAR’s chief economist, in reaction to the S&P/Case Shiller index’s release on Tuesday. “The way to make housing more affordable is to build more homes, particularly small-sized entry-level homes and condominiums.”

Source: National Association of Home Builders and National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 042518