Thursday, October 25, 2012

New Home Starts Going Up Again

Sales of new homes surged in September, providing further evidence of the housing market's improving strength.

The nation's home builders sold houses at an annual rate of 389,000 in September, the government said Wednesday. That was up 5.7% from August and 27% more than last September. It was the highest level since April 2010 when a federal homebuyer tax credit boosted sales. Modular and prefab account for approximately 10 - 13,000 of that total.

The average price of a new home sold in September was $292,400, while the median price was $242,400, the government said. The median price is the price at which half of the homes sold were more expensive, and half were less expensive.

New-home sales are up 22% year-to-date, according to the government's report. They are up 40% in the western U.S. and 33% in the Northeast. Sales in the Midwest are up about 10%. Sales in the South, which account for more than half of the nationwide total, are up 15%, the government said.

Faster construction could spur economic growth and hiring. And it could also encourage more people to put their homes on the market.

In September, builders broke ground on single-family homes and apartments at the fastest pace in more than four years. All this is good news for the modular housing industry which is learning that there is more than just building single family homes and have begun to rapidly move into apartment and townhouse projects. And they requested the most building permits in four years, a sign that many are confident that the gains in home sales will endure.

New-home construction is 39% of the way back to a normal level from the post-recession low. Existing home sales are at 57% of their long-term trend pace, and the drop in delinquencies and foreclosures means that the number of distressed properties has moved 34% of the way back to a normal level.

Construction is a long way from normal. Prior to the bubble we saw 800,000 to 900,000 a year. In the 1990s, it was about 600,000.

Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.

No comments: