Friday, December 28, 2012

New Home Sales May Fall Over the Fiscal Cliff

New-home sales rose in November, recording their strongest pace in more than 2 years, another sign of improvement in the housing market.

The Census Bureau reported Thursday that sales of new homes rose to an annual rate of 377,000 (15,400 modular homes) in the month, up 4.4% from October, and up 15% from year-earlier levels. It was the highest rate of new-home sales since April 2010, when sales were inflated by a temporary $8,000 tax credit for home buyers.

There are two downsides to this good news however. First, most economists say we need at least 600,000 new home sales to have any impact on the economy and secondly, if our elected officials can’t agree in time to keep us from falling over the Fiscal Cliff, new home sales will go right over that cliff also.

The housing market is now showing numerous signs of improvement, including better existing home sales and home construction.

A combination of near record low mortgage rates, lower unemployment and a drop in foreclosures means there are more buyers interested in purchasing, and fewer available homes. That in turn has lifted home prices.

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