Huge Surge for New Home Construction

January 27, 2011

The Chicago real estate market struggled in 2010 along with the rest of the country, but now comes word that new U.S. home sales rose much higher than expected at the end of the year.

The Commerce Department reported that sales jumped 17.5 percent in December to a seasonally adjusted 329,000 unit annual rate.

looking out a window of new constructionIt’s the biggest percentage gain since 1992.

Economists had forecast new home sales to increase by 300,000 units.

The median sales price of new homes sold in December was $241,500, a 13.4 percent increase from November. The average sales price was $291,400.

The surge in new home sales last month was due in large part to a record 72 percent increase in the West. California has been offering a tax incentive worth as much as $10,000 if a homebuyer signs a contract by the end of 2010.

The Commerce Department reported that an estimated 321,000 new homes were sold in 2010. That’s the lowest amount since the government started keeping records on it in 1963.

New home sales are based on contracts, not closings.

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Back to last year being one the Chicago real estate market would like to forget.

RealtyTrac announced Thursday that the Chicago area was No. 2 in the country in bank repossessions last year.

Foreclosure for SaleThe Chicago-Naperville-Joliet metro area reported 45,555 repossessions in 2010, an increase of almost 20 percent from 2009.

The only other major metropolitan area to record more repossessions last year was Phoenix with 55,372.

One out of every 27 properties in the Chicago area received some sort of foreclosure notice last year. The national rate was one out of every 45 properties.

At least our numbers were nowhere near the stats in the Las Vegas area, where one in every nine homes received a foreclosure filing in 2010.

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Now we are into the new year and mortgage rates are on the rise.

Freddie Mac announced an increase in rates for the week ending January 27.

The 30-year fixed-rate mortgage (FRM) rose from 4.74 to 4.80; the 15-year FRM increased from 4.05 to 4.09 percent; the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) went from 3.69 to 3.70 percent and the 1-year ARM increased from 3.25 to 3.26.

Frank Nothaft, vice president and chief economist of Freddie Mac, said that consumer confidence rose to an eight-month high this month and the share of households who said jobs were plentiful rose to its highest level since May of 2009.

“Consumer demand in the housing market is also showing some positive gains,” he said. “Sales of existing homes rose in December to the strongest pace since May and sales of new homes jumped to the highest since April. At their current sales rate, the expected time on the market fell from 9.5 to 8.l months for existing houses and fell from 8.4 to 6.9 months for new homes.”

Good signs pointing to a better 2011.

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