New home sales
The new home sector has been hit extremely hard by the recession but the U.S. Commerce Department’s April data is finally good news after consistently negative reports on all fronts for many months.
Sales of new single family homes rose 7.3% in April which is the best pace in five months. All regions rose in April led by the West which is up 15.1% in sales, up 7.7% in the Northeaste, up 4.9% in the Midwest, and 4.3% in the South.
Sales, permits and inventory have hit historically bad levels in the past year yet this report shows the national inventory fell 2.8% to a new record low, indicating that the silver lining in the struggling sector is difficulty obtaining financing meaning no overbuilding.
NAHB welcomes the news
“The fact that new-home sales have now risen for two consecutive months is certainly welcome news following an all-time low sales number in February,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “That said, builders are still contending with a great deal of competition from foreclosed properties for sale in certain markets, and in places where this is not an issue, it remains extremely difficult to obtain credit to build new homes.”
“While more buyers are starting to show up at builder sales offices this season, the level of actual buying activity remains quite low,” said NAHB Chief Economist David Crowe. “The razor-thin inventory of new homes for sale is indicative of the caution that builders are exercising with regard to new projects as well as their inability to obtain financing for new-home production.”