New home sales posted very encouraging numbers in January, rising 15.6 percent from December to January and 28.9 percent from January 2012, according to the latest analysis by the U.S. Census Bureau and the Department of Housing and Urban Development.
Though new home sales do remain historically low, the monthly increase was the biggest since April 1993, and the current sales rate for new home sales – the annual rate of 437,000 shattered analysts’ expectations of 381,000 – is the strongest rate since 2008.
New Home Sales Positive in January, Prices Down
Interestingly, though new homes sales put up such great numbers in January, the sales prices for new homes were down a bit in January:
- The median sales prices for new homes in January was $226,400, down from $248,900 in December, a decline of 9 percent.
- Similarly, the average sales price was down 5.8 percent, falling from $304,000 to $286,300.
- Too much should not be made of those declines, though; home prices typically decline during the wintry months, so seasonal pressures could very well be to blame for the declines.
Linda Marshall, the broker/owner of Linda Marshall Realtors, said that her new construction developments in the Inner Loop are selling at a rate she’s never seen before.
“‘OMG’ is my only description,” she said. “I can’t believe it. I’ve never seen anything like it.”
Pent-up demand for new construction developments, Marshall said, is extremely high, and its spurred on by the thousands of professionals relocating to Houston for its strong job market and economy.
New Housing Inventory Remains Competitive
Also, those declines in sale prices could be temporary, given that new housing inventory, like existing-home inventory, continues to decline. In January, the Census Bureau found only 150,000 new homes for sale; that’s down 15 percent from December, and represents a supply of just 4.1 months.
As this graph from Calculated Risk shows, that’s the lowest level of inventory for new homes since 2005, and should new housing inventory continue to fall, it could very well approach the historic lows of 1998 and 2003.
It’s worth reflecting, though, on what a dramatic turnaround this represents for the new construction marketplace. In late 2008/early 2009, as the economy teetered, new housing inventory soared, hitting 12.1 months of supply in January 2009 as fewer and fewer consumers were willing to buy the vast stretches of newly-built homes that littered subdivisions across the U.S.
Now, though, the situation has reversed, and the new construction seems poised to move forward as the housing market slowly recovers.