Minor Improvement in New Home Sales: Report
New home sales rose again in February, according to a survey released Monday by John Burns Real Estate Consulting, which accounted for 218 public and private builder executives around the country, representing over 1,600 new home communities in 80 major metropolitan areas.
“We have seen a very minor improvement in sales for the third month in a row, which is attributable to more than just seasonality” said John Burns, CEO of Irvine, Calif.-based John Burns Real Estate Consulting. “That being said, conditions are still horrible, especially for the builders whose financial condition won’t allow them to drop prices further. Most concerning is that the traffic of prospective buyers declined in February, and prices continue to fall in every region of the country.”
About half of builders expect the $8,000 Federal home buyer tax credit, a key measure in Obama's economic stimulus legislation, to provide a minor boost to sales, while the other half think there will be no increase in sales at all.“We interpret this feedback to mean that sales will not improve substantially,” said Burns. "It will take far more stimulus to get buyers to return to the market."
Starts per community averaged 1 unit nationally last month, versus a typical level of 4, and 41 percent of survey participants reported zero starts. Nonetheless, the survey still reported a minor improvement in new home sales, as the rating of expected sales also improved slightly.
The survey also found home prices net of incentives continued to decline as competition from foreclosures priced below the cost to build continued to exacerbate pricing problems. And Unsold, finished inventory showed little change. Communities had 4.2 units of standing inventory on average.
John Burns noted that “the NAHB’s Housing Market Index has not been showing the same improvement as we have, which is likely due to the fact that our survey participants are more inclined to still be building, while the typical NAHB member has shut down operations.”
Write to Kelly Curran at email@example.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade
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