Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=209552
Story Retrieval Date: 3/8/2014 3:59:07 PM CST
Annual home sales in the U.S. reached their highest levels in more than two years last month.
September home sales reach two-year high
The housing market showed further signs of improvement Wednesday as new home sales reached their highest level in more than two years, the government reported.
Sales of new single-family homes rose to a seasonally adjusted annual rate of 389,000 in September, the highest level since April 2010 and an increase of 5.7 percent from August’s 368,000. September’s numbers exceeded the predictions of analysts surveyed by Bloomberg’ who were expecting 385,000 sales.
September sales were up 27.1 percent nationwide from the year-earlier rate of 306,000.
Many factors contributed to the increase, said Robert Kavcic of BMO Capital Markets. They include “a drawdown in the supply of homes on the market, which are back to pre-recession levels; positive price momentum in many markets, which will ultimately boost buyer confidence further; and stability in mortgage lending standards.”
The housing market is recovering slowly since its collapse in 2006. While current sales levels are not yet considered healthy, they are improving, indicating that the market is on the mend.
The median sales price of a new home sold in September was $242,400, an 11.7 percent rise from the previous September.
The amount of homes for sale last month was 145,000. That represents an inventory supply of 4.5 months at the current sales rate, down from August’s 4.7 months, making it the lowest monthly supply since October 2005. It would take 4.5 months to sell all of the available homes on the market at the current rate.
Sales for September were up in the Northwest, South and West. In the Midwest, however, monthly sales plummeted 37.3 percent to 32,000, a 31.9 percent decrease from the same period last year.
New home construction and homebuyer activity also picked up during the last few months. The most recent U.S. Census Bureau report had home starts at a rate of 872,000 for September, a four-year high, and buyer activity up 21 points from September of last year, reaching 35 points. That was the highest amount of potential homebuyers since April 2006.
The National Association of Home Builders estimates that each new home built creates an average of $90,000 in tax revenue and three jobs for a year.
The association also reported that builder-confidence levels reached their highest level since June 2006 in September.
“New home sales should continue to rise over the next year,” said Kavcic. “This is suggested by increased buyer traffic and overall confidence reported by homebuilders.”