Latest new homes sales figures show strong market activity
Wednesday, July 1st, 2015 at 12:27pm.
Are you currently in the market for a new home? The latest news shows that more and more people are. The latest figures show that newly built homes are selling fast with the sales rate last May reaching its highest level for over 7 years. Let’s put that into context. In the early 2000s the housing bubble was building strongly - US homeownership reached an all-time high in 2004. Then around 2008 onwards sales began to dip. Last May’s level of 546,000 is the highest new home sales rate since February 2008. That shows a significant shift is happening in real estate market activity and it looks set to open the door to some promising market potential this year.
Take a look at the trend this year so far. May 2015’s sales figure is more than 2 percent higher than the previous month, and that makes overall sales in the second quarter of this year almost 4 percent higher than in the first quarter of 2015. We can break this down to look more closely at the figures across the US.
National variation of new homes sales
Figures vary across the nation as a whole. In the Northeast, a massive rise of 87.5 percent helped compensate for a slower season over the winter months. In the West, the rise was only around 13 percent - again, April had seen fewer sales than usual. This figure lines up with the national average for sales of the first quarter. In the Midwest, new home sales dropped by 5.7 percent after an unusually successful April. in the South, the sales figures were lower by just over 4 percent, though the average over the two months was still more than a 5 percent improvement on new home sales during the first part of the year.
In May around 206,000 homes were on the market - not much of a shift in inventory from the previous figure - but during this month the absorption rate dropped to 4.5 due to the higher rates of sales. What’s more, the rate of 4.5 was in line with the absorption rate from February of this year, which gives both time periods the lowest absorption rate since the middle of 2013. Sales prices on average were down - a median of 1 percent. That drop in sales prices is because many of the homes sold were at the lower end of the market (below $150,000 in price).
The number of existing homes on the market recent has remained in line with the expected patterns of market behavior, but the steady increase in new homes sales is significant. Remember that most of the buyers who invest in a new home also have an existing home to sell. This is likely to mean knock-on effects for the market as a whole, with more existing homes also coming to market. What’s more, an increase in existing houses on the market affects the cost of new homes too, due to market forces and competition.
The impact of rising costs and market forces
What about factors like building and labor costs? Rising costs of pay, land prices and material costs tend to drive up the price of new homes naturally, since higher prices make new homes more expensive to create. However this is offset by availability of existing homes on the market. If there are plenty of existing homes for sale at affordable prices, new homes have to stay competitively lower.
Looking for a new home, or having an existing home to sell? Whatever your real estate needs we’re here to give you great advice based on our knowledge and awareness of today’s market.