Real Estate Outlook: New Home Sale Surge

 

Provided by Realty Times

There was a 5.7 percent increase in the number of sales of newly built, single-family homes in the month of September according to HUD and U.S. Census Bureau. This is the fastest pace since April 2010, when first-time home buyers rushed to take advantage of the home buyer tax credit.


"Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today's data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "Consumers who have been on the sidelines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today's exceedingly stringent guidelines."



"New-home sales this year have consistently and significantly out-paced their year-ago levels as favorable interest rates, rising prices and improving consumer confidence have driven demand higher," noted NAHB Chief Economist David Crowe. "Meanwhile, despite a small increase in the inventory of new homes on the market in September, the number of completed new homes for sale is now at an all-time low and the month's supply is at its tightest since October 2005. This is an indication that builders continue to have a tough time obtaining construction credit, even as demand for new homes increases." The inventory is now at a 4.5 month supply.

Regionally, gains were widespread, with both the Northeast and South posting double-digit gains, 16.7 and 16.8 percent respectively.



The good news extends past just new home sales this month. The latest National Association of Home Builders/First American Improving Market Index (IMI) shows that 22 new markets have made the list, which now totals 125 housing markets showing consistent -- 6 months worth -- improvement data in employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau.



Markets added to the list in November include such geographically diverse locations as San Diego, Calif.; Gainesville, Ga.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.



"Ninety-seven out of 103 markets retained their spots on the list from the previous month," observed Rutenberg. . "This shows that a housing recovery is firmly taking root and helping generate needed jobs and economic growth across much of the country -- though we know that this expansion could be even stronger were it not for ongoing challenges including overly tight lending conditions and difficult appraisals."



"The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year," noted NAHB Chief Economist David Crowe. "Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index."

Is housing turning a corner? Experts think the latest data may point to just that.