Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=216799
Story Retrieval Date: 7/24/2014 9:40:20 AM CST
January's new residential sales numbers have slowly been increasing since 2009.
New home sales highest since 2008, but inventory lags
Purchases of new homes soared in January to the highest level since the summer of 2008, suggesting the housing market’s recovery continues to gain momentum.
Sales rose to a seasonally adjusted annual rate of 437,000, a 15.6 percent increase from December, according to Commerce Department figures released Tuesday. Numbers surpassed the January 2012 estimate by 28.9 percent.
The median estimate of 72 economists surveyed by Bloomberg was 382,000 new homes sales for the first month of 2013.
January saw an uptick in sales across all four U.S. regions, but the West saw the largest growth to 125,000 from 78,000 a year ago, a 60.3 percent soar in sales from the year ago period. The Midwest saw a 13.6 percent increase in new home sales to 50,000 from 44,000.
Nationally, the median sales price of new homes in January rose 2.1 percent to $226,400; the average sales price was $286,300.
Experts say the increase in new home sales was due to higher consumer confidence encouraged by historically low mortgage rates, stronger employment numbers and less competition from foreclosures.
But alongside higher sales numbers, home inventories are dwindling, with the supply of new homes on the market dropping to 22.6 percent in January, the lowest since 2005. There were 150,000 new homes for sale at the end of the period, a 4.1 month supply.
Favorable interest rates are incentives to buy, but lower numbers of available new homes might be stemming sales growth.
“We continue to hold that with buying conditions remaining favorable inventories are the big story in the new home market,” said in a research note. “Inventories of new homes for sale… are still likely low enough to be acting as an impediment to faster sales.”
John Vossoughi, real estate broker for @properties in Chicago, is seeing inventories decline in the Chicago area. “A lot of people are paying premiums because there’s not a lot of options,” he said. “As soon as a good listing comes on the market… it will get multiple offers and there’s really no negotiating power for buyers.”
People are selling easily, but are finding it more difficult to buy a home. Low inventories have created a sellers market.
Vossoughi doesn’t see the inventory shortage continuing for long. “I think it might change by the fall, it might stabilize in a little bit,” he said. “There will be more inventory, which will give buyers more options to level off the pricing.”
Stocks increased slightly after the report was released Tuesday. The S&P 500 rose 0.3 percent to 1,492.23 at 12:34 p.m. in New York.