New home sales drop
The hardest hit sector of real estate has again been served bad news as the U.S. Commerce Department reported today that after three consecutive months of improvement, the sales of newly built, single-family homes dropped 2.2 percent to a seasonally adjusted annual rate of 307,000 units in December, officially marking the worst sales year on record since recording began over five decades ago.
The Southern region plummeted 10.1 percent, while the Midwest fell 3.7 percent, the West rose 9.0 percent and the West posted a boom month for new home sales, up 46.7 percent for the month, yet not enough to keep the average from dipping as a nation. The inventory of new homes for sale set a new record low of 157,000 units, a 6.1-month supply at the current sales pace.
Despite the historically bad year, the National Association of Home Builders (NAHB) said in a statement that they are forecasting that new home sales will rise 18 percent in 2012.
Bob Nielsen, chairman of the NAHB said, “The bottom line is that, while 2011 was the worst year for new-home sales on record, signs of gradual improvement began to emerge near the end of the year across a growing number of markets. This nascent recovery should continue to gain strength in the year ahead as more buyers take advantage of the very good deals that out there for newly built homes.”
“The three-month moving average for new-home sales and numerous other indicators — such as builder confidence, new building activity and the razor-thin inventory of new homes for sale — show that the market is basically holding its own, and no longer moving backwards,” said NAHB Chief Economist Dr. David Crowe. “However, many of the same challenges that builders have cited in the past continue to pose obstacles to the market’s advancement, including buyers’ inability to sell an existing home, consumer concerns about job security, and tight credit conditions for both building and buying new homes.”