Spring 2014 Prospects for New Home Sales
A web site for real estate insiders recently published an article about the sales figures for new family homes in February 2014. The report cited a 3.3 percent seasonally adjusted annual rate of just 440,000 homes in that month, according to the U.S. Department of Housing and Urban Development and U.S. Census Bureau. The numbers translate into the lowest number of new homes available for sale since September 2013.
A spokesman from the National Association of Home Builders (NHB) confirmed that persistently bad weather had a negative effect on sales in February, but noted that many builders are continuing to increase their inventory of homes for sale. This indicates that builders are projecting a relatively strong buying season for spring 2014. Another source in the NHB said that the builder trade organization remains optimistic that this will be a strong year for housing, despite the seasonal slowdown over the winter months.
A two-month average in early 2014 remains precisely in line where the numbers left off in 2013, according to the source. In fact, if not for the unusual weather, the average would be far ahead of last year’s pace. Also, household formations, along with pent-up demand are poised to drive sales forward. The inventory of new homes increased to 189,000 units in February 2014, and this translates to a 5.2-month supply when the current sales pace is factored in. This is the highest supply of new homes on the market since December 2010, but some regional inventories do remain tight across the US.
In the Northeast, for example, new home sales dropped by nearly 33 percent in February, the largest decline since October 2012. New home sales also declined by 15.9 percent in the West, but just 1.5 percent in the South. In the Midwest, though, the number surged to 36.7 percent, a remarkable increase, given an unusually low figure for January.
Bottom line? If you’re in the market for a new home, you may need to consider expanding your search to include attractively-priced existing homes.