Home Sales, Prices Falling
New home sales and prices are falling, marking another lousy year for developers and the new construction industry as a whole.
According to the Economics and Statistics Admininstration, sales of new single-family homes in December fell 7.6 percent from November, and declined 8.6 percent from December, 2008. For the full year of 2009, new home sales fell 22.9 percent, to 342,000.
In short: It was a disastrous year for new home sales. It's the lowest number of sales since 1982, when mortgage interest rates reached 18 percent.
The median sales price of new houses sold in December 2009 was $221,300; the average sales price was $290,600.
If you look at the price point where most of the new homes sold, nearly half of all 342,000 homes sold were priced from $150,000 to $250,000. Just 10,000 homes were sold at a price higher than $750,000 while 26,000 were priced at $125,000 or less.
The way sales were spread out over the four quarters of 2009 is interesting, too. Some 84,000 homes were sold in the first quarter of 2009, before the $8,000 home buyer tax credit kicked in. And just 83,000 homes were sold in the fourth quarter, after most new home buyers assumed the tax credit would have expired. During the second and third quarters of 2009, exactly 104,000 homes were sold in each quarter.
But the downturn in sales in the four quarter means the seasonally adjusted estimate of new houses for sale at the end of December was 231,000. Because sales were so slow, the inventory of new homes for sale rose to an 8.1months' supply at the current sales rate.
Buying a new construction home generally has a longer lead time. And, closings for all times of residential property are taking at least two months to complete. If work backward from April 30, 2010, when all home buyer tax credit contracts must be complete, you realize that buying new construction means getting that contract in during February or March.
To close on a new home and qualify for the tax credit, you'll need a Certificate of Occupancy. And, when it comes to new construction, it can take longer than you expect to close on your home.
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