Sales of New Homes Declined in January 2011

WASHINGTON – Feb. 24, 2011 – Sales of newly built, single-family homes declined 12.6 percent to a seasonally adjusted, annual rate of 284,000 units in January, according to figures from the U.S. Commerce Department. The decline largely offsets a big gain in sales activity recorded in the previous month, but the National Association of Home Builders (NAHB) says the drop can be blamed, in part, on an expiring tax break in California.

“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,” says Bob Nielsen, chairman of NAHB. “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.”

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.

“This latest 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,” says 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.”

© 2011 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.

NOTE FROM JOHN ELWELL - REALTOR: Since inventory levels of existing homes are still pretty high, perhaps not adding a lot of new homes to that inventory is not such a bad thing in the end. For current sellers, having less competition can help them out a lot. Just something to consider.

Comments

[Rich Cederberg]

Looks like we're not quite out of the woods yet. Thank you for posting.