Nov
28

New-Home Sales Improve, Especially in the Midwest

November 28, 2011

Great news on new-home sales: Activity last month increased to its best pace in five months.

According to the U.S. Commerce Department, the sale of newly built, single-family homes in October rose 1.3 percent to a seasonally adjusted annual rate of 307,000 units in October.

The gain is from a downwardly revised rate in September and marks the best pace of new-home sales activity since May.

It’s also 8.9 percent above the sales numbers estimated in October 2010.

“Builders have been seeing some marginal improvement in sales activity over the past few months, particularly in select markets where consumer confidence is higher due to improved economic conditions,” said Bob Nielsen, chairman of the National Association of Home Builders.

“While this trend is encouraging, overall sales activity is still well below normal due to the effects of overly tight credit conditions for builders and buyers, the continued flow of distressed properties on the market, and inaccurate appraisal values on new homes.”

New-home sales in the Midwest region of the country happened to improve the most, gaining 22.2 percent in October. The West rose 14.9 percent last month; the Northeast stayed the same, and new-home sales in the South fell 9.5 percent.

Meanwhile, the nationwide inventory of new homes for sale held at an all-time record low of just 162,000 units in October, which equates to a 6.3-month supply at the current sales pace.

“Today’s report is right in line with our forecast for modest and gradual improvement in sales activity through the remainder of the year,” said NAHB Chief Economist David Crowe.

“Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply.”

Categories: Economy, New Homes

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