Various reports issued this week show contradicting and in some cases unexpected trends in the housing market in January. First, sales of existing homes rose 3%, the largest month-over-month gain in 2 years, according to the National Association of Realtors (NAR). At the same time, the inventory of unsold homes rose 2.3%, in spite of a drop in new construction reported earlier this month. At the current sales pace, the unsold inventory equals a 6.6 month supply. Existing home sales in January were still 4.3% below the January 2006 levels. On the other hand, sales of new homes dipped 16.6% below December 2006 sales, according to the Department of Housing and Urban Development (HUD). The median sales price dropped 3.1% on year-over-year basis, to $210, 600.
NAR officials said it’s hard to tell whether the real estate market has bottomed out, as large-scale weather events may have affected the January sales numbers. Are they saying anything new? Yes, NAR president Pat Combs said the market “is trending up”, but what is the evidence behind such statements? This could be the bottom, with its mixed trends and contradicting results, but it might as well be an extension of the downward curve. I don’t think anyone knows for sure. We’ll wait until the February results come out.
Showing posts with label hud. Show all posts
Showing posts with label hud. Show all posts
Thursday, March 8, 2007
Tuesday, February 20, 2007
New Construction Fell 14% for January
According to a report issued by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD), new construction fell 14.3% in January, to levels 37.8% below January 2006 figures.
This news is not surprising, after reports of high unsold inventories indicated an oversupply of new houses that just don’t sell anymore. Last month, builders were refusing to start new projects and did everything possible to get rid of new houses, including cutting prices and offering various incentives to buyers. Large numbers of new homes remained unoccupied and many builders lost their jobs, so it’s natural that fewer new houses were constructed. Housing starts are expected to decrease in 2007, helping reduce the number of vacant homes waiting for buyers. As supply diminishes to match demand, the market will become more stable and predictable.
And while these numbers indicate positive trends for the Real Estate industry and the economy as a whole, they may be devastating on a company or individual level. Waiting for the storm to pass may not work for any home builder, because the market is expected to stabilize at below-boom levels, thus forcing some companies out and making others cut staff.
This news is not surprising, after reports of high unsold inventories indicated an oversupply of new houses that just don’t sell anymore. Last month, builders were refusing to start new projects and did everything possible to get rid of new houses, including cutting prices and offering various incentives to buyers. Large numbers of new homes remained unoccupied and many builders lost their jobs, so it’s natural that fewer new houses were constructed. Housing starts are expected to decrease in 2007, helping reduce the number of vacant homes waiting for buyers. As supply diminishes to match demand, the market will become more stable and predictable.
And while these numbers indicate positive trends for the Real Estate industry and the economy as a whole, they may be devastating on a company or individual level. Waiting for the storm to pass may not work for any home builder, because the market is expected to stabilize at below-boom levels, thus forcing some companies out and making others cut staff.
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