subject: New Home Sales Rising [print this page] The media has for the past few years been heralding the woes of housing markets across the nation. From record levels of foreclosures to lower housing starts and abandoned construction projects, the housing market has been, in a word, a mess.
No, the housing crisis isnt over yet, but there are hopeful signs that the industry may be pulling out of the nosedive.
According to a recent report from the U.S. Commerce Department, sales of newly constructed single-family houses hit their highest level since 2010, increasing by 7.6 percent in May as compared with the previous month. The increase was also 19.8 percent higher than the total for May of 2011, the report stated.
The increase is significant because real estate sales have always been a good indicator of a recovering economy in the past. In general, when interest rates have dropped, the construction and sale of new homes has risen, spurring a boost in the economy. However, the drastic (and prolonged) slump of the housing industry in recent years, say the experts, has limited its role in helping the economy recover.
Sales for May of this year were approximately 369,000, said the Commerce Department, the most sales since April of 2010. At that time, a federal tax incentive program helped send sales upward. When the program ended, the market once again went into a decline.
The new home market hit a dramatic low last year and set a record for the worst year for new home sales.
This year, however, is a very different story. Because construction of new homes was limited, the prices of the homes leveled off. The rate of foreclosures has also leveled off in most cases. Now custom home builders are beginning to get back to work again and the inventor of new single-family homes is increasing, withy more than 140,000 homes on the market. The price of new single-family homes is rising also, increasing by almost 6 percent during the same period in 2011. The media price now stands at approximately $230,000, above the median price of $183,000 in 2011, according to the National Association of Realtors.
Some financial experts are urging caution over the new numbers, saying housing statistics may sometimes be an unreliable indicator, particularly the report for one particular month. They also worry that the small gains made could be wiped out by another downturn in the economy. Finally, experts added that while prices on new homes are moving upward and mortgage rates are at some of their lowest levels ever, the confidence of homebuilders is still low.
The experts added that the housing construction and sales boom seems to be limited to certain regions in the country as well. Places that have traditionally seen slow growth are finding themselves becoming popular locations for building custom homes, while areas around major cities such as New York and Chicago are still struggling.
