Rise of New Home Sales in November Provides Positive Outlook for Home Builders in 2011

Sales of newly built, single-family homes increased 5.5 percent to a seasonally adjusted annual rate of 290,000 units in November, according to newly released figures from the U.S. Commerce Department. The gain represents a partial bounce-back from a near-record low, downwardly revised number of new-home sales in October.

“While builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign,” said Bob Jones, chairman of the National Association of Home Builders (NAHB). “With consumer interest in new homes expected to continue to revive as the economy and job markets improve, and inventories of new homes for sale near record lows, our concern now is that a lack of construction financing will keep builders from being able to expand the selection of what they have to offer buyers heading into the spring.”

“Builders in our latest surveys have indicated that they are starting to see more buyers who are seriously considering a new-home purchase, and the numbers showing that sales headed in the right direction in November bode well for what the future may hold,” agreed NAHB Chief Economist David Crowe. “The extremely low inventory of new homes on the market is also a positive sign that builders have been exercising tremendous caution with regard to new construction activity. That said, unless builders’ access to financing for new development improves, many will not have a product to sell when the opportunity arises, which in turn would slow a market recovery as well as potential job generation from new home building.”

This rise is attributed to sales increases in both the South, the nation's largest housing market, which saw a 5.8 percent gain, and the West, which saw an impressive 37.3 percent rebound over October.

According to the National Association of Home Builder (NAHB) the inventory of new homes for sale is now at an 8.2-month supply, at 197,000 units. This is the first time in 42 years the inventory has fallen below the 200,000 level.

Source: nahb.com