New Home Sales Surge in January

February 27, 2013

National home sales surgeHUD and the U.S. Census bureau recently announced that nationally, new home sales in January rose by 15.6 percent. This equates to a seasonally adjusted annual rate of 437,000, the highest sales pace since July of 2008.

New home sales posted solid gains across every region of the country in January.  The increases were as follows:

  • Northeast – 27.6 percent
  • Midwest – 11.1 percent
  • South 3.2 percent
  • West – 45.3 percent

“Today’s report shows a strong revival in new-home sales across all regions of the country and bodes well for the upcoming spring buying season,” noted National Association of Home Builders (NAHB) Chief Economist David Crowe.

This fast sales pace has reduced new home inventory available for sale to its lowest amount since early 2005. At current sales rates, the 150,000 inventory homes currently available represent a 4.1 months supply of homes, with a six months supply considered the historic norm. These numbers are expected to lead to additional starts by homebuilders  in the coming months, which should add additional jobs to the current economic recovery.

Although, this encouraging news does come with a few concerns that could affect continued recovery in the new home industry. Homebuilders across the country are facing new challenges that include dwindling lot supplies, spot shortages of skilled labor and rising materials costs. Even though homebuilding is still only at half the level that economists consider normal, these items are a concern as they  could potentially cause a slowing of the housing recovery, which is seen as a major component of long term growth in the economy.

This news comes just after the recent reports showing nationwide increases in home prices for 2012 in the S&P Case-Shiller Home Price Index. Increased sales and  increasing prices are a combination that point to 2013 potentially being the year of the real estate recovery.

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