The National Association of Home Builders (NAHB) report sales of newly newly built, single-family homes declined 12.6 percent to a seasonally adjusted, annual rate of 284,000 units in January.
“While poor weather conditions likely played a part in keeping potential buyers on the sidelines this January, we do expect consumer demand to improve somewhat along with job-market gains heading into the spring buying season,” noted NAHB Chairman Bob Nielsen. “However, with the already-thin inventory of new homes for sale continuing to decline and the consistent unavailability of construction credit, the question is whether builders will be able to meet the improving demand as it emerges.”
Bloomberg News reported sales of U.S. previously owned homes dropped in January from a seven-month high, showing any recovery will take time to develop.
Purchases decreased 1.1 percent from December to a 5.22 million annual rate, according to the median forecast of economists surveyed by Bloomberg News. A 13-year-low 4.91 million existing houses sold in 2010.
Bloomberg reported home demand has gained ground since July 2010, when sales reached the lowest level in a decade of records, as foreclosure- induced price cuts and historically low borrowing costs made buying more affordable. At the same time, 9 percent unemployment limits the number of buyers able to take advantage of discounts and ensures a mounting supply of distressed properties.
“The latest US Department of Commerce report shows new-home sales activity returning to a rate that is consistent with the low level of activity seen in the third and fourth quarters of 2010,” said NAHB Chief Economist David Crowe. “Builders are clearly facing a competitive disadvantage with regard to the large inventory of existing homes at a time when they are unable to replenish their own inventories due to a lack of available financing.”
Regionally, new-home sales declined 12.8 percent in the South and 36.5 percent in the West, but gained 54.5 percent from a very low number in the Northeast and rose 17.1 percent in the Midwest this January.
Meanwhile, the inventory of new homes for sale continued to edge downward, by 0.5 percent to 188,000 units in January. This amounts to a 7.9-month supply at the current sales pace. Read More.