Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights new home sales.
- New homes sales were down 23.1% in April relative to the same month last year according to the Census Bureau. The decline was no surprise as the 2010 figures were fueled by the $8,000 Federal tax credit. However, the median sales price was up 4.6% over this period, likely a reflection of tighter inventories, higher commodity prices, and more new sales occurring in non-distressed markets.
- Inventories are at historic lows, limiting the volume of homes that can be sold. The inventory of new homes averaged 309,000 monthly between 1991 through 2003. This figure jumped to 454,000 over the period from 2003 to 2007, but was just 175,000 in April.
- As a share of total single family sales, new homes fell to just 6.8% in April. Historically, that figure has hovered around 15% to 20%. New home sales reflect weakness in the housing construction sector, which has hurt employment growth, but has enabled the housing market to focus on the overhang of inventory from short-sales and foreclosures. New home sales will remain muted in the near term as low construction reflects weak demand, soft prices and growing inventories of distressed properties, but construction and new homes sales will likely follow improving sales in non-distressed markets as we approach 2012.