New-Home Sales Start Year Flat

February 26, 2012

The sale of newly built, single-family homes fell ever so slightly last month, and the decline could be attributed most to the region in which Chicago real estate lies.

New-home sales in January fell by 0.9 percent to a seasonally adjusted annual pace of 321,000 units, according to data released from the U.S. Commerce Department.

The decline was the result of a 24.5 percent drop in sales in the Midwest, along with a 10.6 percent fall in the West. The Northeast increased 11.1 percent and the South rose 9.3 percent.

Still, new-home sales in January were up 3.5 percent over January of 2011.

“This is indicative of the incremental, steady progress that the market is making toward recovery in conjunction with modest economic and job growth,” said National Association of Home Builders (NAHB) Chief Economist David Crowe.

“Increasingly, potential buyers are feeling better about their financial situation and their ability to buy a home, but the challenges posed by tight credit conditions and appraisal issues continue to slow that process.”

Despite the decline in sales, there was other positive news in this data. The inventory of new homes for sale fell to 151,000 units, a new record low, and is equal to a 5.6-month supply at the current sales pace.

About that current sales pace: It’s the best in nearly two years.

“Outside of the upwardly revised December number, this is actually the best sales pace we’ve seen since April of 2010, when the home buyer tax credit was in effect,” said Barry Rutenberg, NAHB chairman.

“Moreover, many recent indicators – from our builder confidence surveys to housing starts and permits data and the expanding list of improving local markets – have provided evidence that consumers are becoming more confident about making a home purchase.”

Categories: Economy, New Homes

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