New Home Sales Surprise: They’re Up!

Home building, one of the most battered sectors of the U.S. economy in recent months, showed surprising strength in November.

New homes sold at an annual pace of 1.05 million, up from the revised annual rate of 1.01 million in October. The signs are there that Florida home mortgage activity is returning.

Median prices, new home supply

The median home price came in at $251,700 in November, up from the $248,500 level in October. This figure had shown declines earlier in the fall due to a glut of homes available for sale on the market.
The national median price is now back to the second-highest level on record, trailing only the $257,000 level reached in April of this year.

The inventory of completed new homes available for sale continued to creep up, setting yet another record at 169,000. However, all new homes available for sale - which includes those with permits but not yet started as well as those under construction - was slightly lower. That took the inventory of new homes on the market down to an estimated 6.3 months supply in November.

And while the pace of home sales is down 15.3 percent from the white-hot sales rate of a year ago, it’s up nearly 7 percent from the trough hit in July of this year, when revised figures put the annual sales pace at just under a million.

John Tomlinson, an analyst with Majestic Research who covers the major publicly-traded builders, said the government report is missing some signs of weakness in the new home market, including orders for new homes which are cancelled by buyers or incentives offered by builders, such as covering closing costs or extra features on the homes for free, in order to support sales in the weak market.

“I’m not so sure that the pricing has bottomed here,” Tomlinson said. “There’s still a ton of inventory on the market. When inventory comes more in line with demand, we’ll be ready to see an upturn.”

In other words, buyers: Go send in a Florida mortgage loan application while you can. Take advantage of low prices while you can.