New Home Sales Crater In January, Opening The Door For Deals With Builders

Filed under New Home Sales by on February 25, 2011 at 7:47 am {no comments}

New Home Sales (Jan 2010 - Jan 2011)

Not all housing reports are sunny, it seems.

In its monthly New release, the U.S. showed a 13 percent drop-off in annualized new construction sales between the months of December and January.

It’s the biggest one-month drop in since May 2010.

In addition, the supply of new homes for sale spiked higher to 7.9 months last month.  ”Home supply” is defined as the amount of time it would take to sell the complete “for sale” inventory at the current pace of sales.

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New Home Sales Reach 8-Month High

Filed under New Home Sales by on January 28, 2011 at 7:47 am {no comments}

New Home Supply (Dec 2009 - Dec 2010)Sales of new homes rose sharply in December, posting a 17.5 percent gain from the month prior.

According to the Department of Housing and Urban Development, New climbed to 329,000 in December, besting November by close to 50,000 units on a seasonally-adjusted annual basis.

Last month’s reading is an 8-month high for , and the latest in a series of signals that housing is improving in Chicago and around the country.

Note that December’s Existing Homes Sales and Building Permits reports also showed marked gains last month, climbing 12 percent and 6 percent, respectively.

Furthermore, an interesting pattern is emerging in the price points of home sales. The highest levels of relative growth are occurring within the “move-up buyer” segments. Entry-level price points are lagging the market, as a whole.

December’s New breaks down by price point as follows:

  • Homes under $200,000 : 36% of the market (-9% from November)
  • Homes between $200,000-$299,999 : 32% of the market (+7% from November)
  • Homes between $300,000-$499,999 : 27% of the market (+7% from November)

Luxury homes accounted for less than 5% of the newly-built home market, suggesting that Illinois homeowners are either not “buying new” as frequently, or are choosing to renovate their existing properties instead.

The 2010 finished on a tear, and that momentum is carrying forward into 2011. Expect the spring season to show strongly, putting pressure on home prices to rise.

Coupled with rising mortgage rates, the long-term cost of homeownership is unlikely to be as low as it is today.

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New Home Sales Rise In November; Hint At Strong Winter 2011

Filed under New Home Sales by on December 28, 2010 at 7:48 am {no comments}

New Home Sales (Nov 2009 - Nov 2010)Like most housing data in November, the most recent New report showed sales volume increasing last month, and falling.

According to the U.S. , sales of new, single-family homes increased to 290,000 in November on an annual basis, a figure equal to the 6-month rolling average, and a 6 percent improvement from October.

At the current pace of sales, the national supply of new homes for sale will be exhausted in 8.2 months — a strong 0.6-month improvement from October.

This data is consistent with the most recent Existing Home Sales report. It showed sales volume rising 6 percent, too, and a similarly-strong inventory drop.

For the in Oak Park , it’s another step in the right direction. Since May’s post- plunge, home prices have stabilized and a foundation for growth has been built. Home builder confidence data highlights this point.

Also interesting in the November New Home Sales report is the volume breakdown by price point. Less expensive homes powered the market:

  • Homes under $200,000 : 47 percent of all sales
  • Homes between $200,000-$299,999 : 29 percent of all sales
  • Homes between $300,000-$399,999 : 14 percent of all sales

Luxury homes accounted for less than 2 percent of sales last month suggesting that builders count first-time and move-up buyers as their core market.

As 2010 comes to a close, housing looks poised for a rebound. Sales in all categories are improving, relative to 6 months ago, and the economy is improving. In conjunction with rising mortgage rates, the best time to buy a new home may be now.

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New Home Sales Slip In October

Filed under New Home Sales by on November 30, 2010 at 7:47 am {no comments}

New Homes Sales (Oct 2009-2010)After posting a strong September, the number of newly-built homes sold nationwide slipped in October.

Total units sold on an annual basis dropped by 25,000 from September; supplies of new homes climbed 0.7 months. Home supply is back to its rolling, 6-month average of 8.6 months.

Like everything else in real estate, however, the October’s New results varied by location.

For example, except for the South, each U.S. region posted a loss. In the South, there was a 3 percent gain. This is statistically significant because more new homes are sold in the South than in all other U.S. regions combined.

In October, the South accounted for 58 percent of all homes sold.

The dip in did not surprise Wall Street. is closely correlated to Housing Starts, and Housing Starts fell in July and August. Furthermore, it seems home builders expected the dip and are brushing it off.

In a poll taken 2 weeks ago, builders reported higher confidence in housing, and their respective prospects for the future. Home builder confidence is at its highest point since June.

For buyers in Chicago , the effects of New are unknown. In a normal environment, falling sales volume and rising would help shift negotiation leverage away from the seller and toward the buyer, resulting in lower sales prices.

However, in this market, the “sellers” (i.e. home builders) are more confident about housing, and that offsets a buyer’s statistical edge.

With home prices stagnant and mortgage rates rising, therefore, the best “deals” may come between now and the New Year.

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New Home Housing Stock Drops To A 5-Month Low

Filed under New Home Sales by on October 28, 2010 at 7:48 am {no comments}

New Home Sales (September 2009-2010)In the same week that the National Association of REALTORS reported home resales up 10 percent in September, the U.S. Census Bureau reported similarly strong results for the new construction market. 

After improving 1 percent in August, New popped another 7 percent in September.

It’s no wonder homebuilder confidence is at a 5-month high.

  • Sales volume is higher in 4 of the last 5 months
  • is at a 5-month low
  • Buyer foot traffic is on the rise

For home buyers in Chicago , September’s data may foreshadow a shift in builder sales strategies and it’s something worth watching.

Recall that in April, the month that the federal homebuyer contract deadline passed for non-military citizens, sales of new homes was strong as buyers rushed to meet the April 30 cut-off date.

When the month ended, there were 216,000 new homes for sale — an inventory that would have taken 6 months to sell off in full, given April’s sales pace.

In May, however, the month after the tax credit deadline, buyers vanished. As a consequence, total units sold dropped 31 percent to their lowest level in recorded history. Coincidentally, at the end of May, there were still 216,000 units for sale.

By contrast, though, at May’s sale pace, the inventory would have needed nine months to sell out.

This is why builders are optimistic. The market for new construction is improving so buyers may have a harder time trying to negotiate for items like free upgrades or sales price reductions. So long as New Home Sales improve, home buyers may find themselves paying more money for less house.

Therefore, if you’re in the market for a newly-built home somewhere near Lincoln Park , you may want to move up your time frame. The longer you wait, the more it may cost you.

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New Home Sales Unchanged In August; Market Stabilizing

Filed under New Home Sales by on September 28, 2010 at 7:47 am {no comments}

New Home Supply August 2009 - August 2010Existing rebounded last month after a lackluster July. data, by contrast, did not.

After an upward revision to July’s data, New Home Sales remained unchanged at 288,000 units in August. It marks the second-lowest number of units sold in a month since 1963, the year government started its record-keeping.

At the current pace of sales, the newly-built home inventory would be depleted in 8.6 months.

The August New Home Sales was weaker-than-expected, but both Wall Street investors and Main Street economists are shrugging it off. The numbers were foreshadowed by weakening housing figures from earlier this summer.

For example:

  1. Building Permits dropped between March and June
  2. Housing Starts dropped between April and July
  3. Homebuilder confidence continues to sag

Together, these three data points suggest that the market for new homes will be soft through at least this month.

With New Home Sales fading and colder months ahead, it may be an opportune time for home buyers in Oak Park to look at new construction. Builders are eager to move inventory and the cost of materials remains low.

Buying “new” may never be cheaper — especially with mortgage rates as low as they are. The 0.750 percent drop in rates since January has shaved $188 off of a $200,000 mortgage’s monthly cost. That’s $2,250 per year in savings.

As dwindle and mortgage rates rise, finding “great deals” in new construction will undoubtedly get tougher. Take advantage of today’s market conditions, combined with builder pessimism. It may be the right combination at the right time to get that new home for cheap.

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New Home Sales Drop In July — Just Like Existing Home Sales

Filed under New Home Sales by on August 26, 2010 at 7:47 am {no comments}

New Home Supply July 2009 - July 2010One day after the National Association of Realtors released the softest Existing report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months.  At July’s rate of sales, the nation’s new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It’s all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April.  A “housing start” is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down.  The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there’s two sides to the story. Although the data looks bad for builders, it can be terrific  for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home in Chicago may have just become cheaper.

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March Shows New Home Sales Surging

Filed under New Home Sales by on April 27, 2010 at 7:47 am {no comments}

The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.

Take a look at the headlines from last Friday:

None of these statements is false, per se, but each is somewhat misleading.  The biggest reason why March’s was even able to rise 27 percent is because data from the month before it — February — was the worst in New Home Sales history.

In February, new homes sold posted its lowest level in recorded history.

A better comparison would be against March a year earlier; or October 2009, the month before the ’s initial expiration date.

Against both of those time periods, March 2010 fared well.

Home buyers – first-timers and repeats alike — went under contract last month, taking advantage of the soon-to-expire federal home buyer .  The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.

Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.

The New included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low.  Along with stronger home demand, this should push Chicago home prices higher throughout the coming months.

It’s no wonder builders are bullish on the economy.

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Home Supply Indicates A Few Extra “Good Deals”

Filed under New Home Sales by on February 25, 2010 at 7:47 am {no comments}

dropped last month by 11% and hit the lowest levels in the 47 years that the index has been tracked.

This is great news for current home shoppers.  The was rallying all year, pushing the home supply down to 7 months by last October.  Supply was down, demand was up, and the best deals on homes were all turning into multiple offer situations in many markets.

We’re seeing continued general strength in the housing market, but last month’s data revealed a brief pause.  Additional supply should lead to better negotiating power for buyers and more favorable terms on items like closing costs concessions and free upgrades from builders.

The reasons for the spike in supply are varied:

  • The original expired in November
  • Weather conditions were awful in most of the country in January
  • Weak employment and consumer confidence continue to hinder big ticket sales

The is all a matter of timing.  This data is over a month old now.  Market conditions in the street today determine the price you’ll get today. Still, this is great timing for people making offers in the very short term.  Next month’s report will likely look a little better.

With the tax credit expiring, FHA interest rates rallying, and a generally improving housing market, it looks like a great time to buy.

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