New-Home Construction Improves

October 26, 2011

Following four straight months of declines, including a six-month low in August, the sale of newly built homes finally increased last month.

According to the Commerce Department, the sale of new U.S. homes rose 5.7 percent in September to a seasonally adjusted annual rate of 313,000 units.

“The improved rate of new-home sales in September is on par with NAHB’s forecast for the overall number of sales this year and in keeping with the spotty improvements that our latest builder surveys have highlighted in select markets,” said National Association of Home Builders Chief Economist David Crowe.

“While 313,000 is still an exceptionally low rate of new-home sales by historic standards, it is an encouraging sign of an anticipated broader recovery over the course of next year, and builders have helped the situation by keeping their inventories of homes for sale very lean in areas where there is an oversupply of existing units.”

And lean those inventories remain: Last month’s new homes for sale held at an all-time record low of 163,000 units.

Just for comparison sake: Economists say that in a healthy housing market, about 700,000 new homes should be sold each month.

Chicago’s region fared the worst for new-home sales in September:

*Midwest: Fell 12.2 percent

*Northeast: Fell 4.2 percent

*West: Rose 9.7 percent

*South: Rose 11.2 percent

With such a large inventory of existing-homes for sale, including foreclosures and short sales, the new-home market will continue to struggle.

It’s too bad: According to the NAHB, each new home built creates an average of three full-time jobs and generates about $90,000 in taxes. Just what the economy needs, and then some.

Categories: Economy

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