The Census Bureau reported today that new homes sales for January 2011 was at a seasonally adjusted, annual rate of 284,000 units, a decline of 12.6% from December 2010 but approximately equal to the sales rates of October and November of last year.
The December 2010 new-home sales number appears to stand as a one month uptick that was due to certain building code changes and an expiring California homebuyer tax credit.
On a month-over-month basis, new home sales declined 12.8 percent in the South and 36.5 percent in the West, but gained 54.5 percent in the Northeast and 17.1 percent in the Midwest.
With respect to prices, the median new home sales price fell to $230,600 ($260,300 as an average sales price). However, there was an increase in homes sold in the $200,000 to $300,000 price class; perhaps an indication of an increase in the share of the market due to repeat homebuyers, as well as reflection of the increase in sales in higher-priced California.
Builders continue to face a competitive disadvantage from the large supply of existing homes on the market. Inventories of new homes fell to a new low (187,000 units for sale; 7.8 months supply). In contrast, the supply of existing homes on the market, as reported by the National Association of Realtors, stands at 3.38 million, a 7.6 months supply.
The decline in the inventory remains good news in that the supply of excess homes continues to decline. However, this decline in inventory also reflects the inability of builders to obtain credit for construction purposes, which will limit home builders’ ability to meet rising demand for housing as the job market improves.