US New-Home Demand Rose 27 Percent In September

(EstateNewsWire.com, November 10, 2012 ) Brighton North VIC, Australia- A number of recent signs suggest a comeback in U.S. housing is underway. The latest is a late-October report by the U.S. Commerce Department. It found demand for new houses rose 27.1% in September, compared to year-ago levels.

The September figures put new-home sales at their fastest pace in over two years, and slightly ahead of economists’ consensus estimate. The new-home sales in September set the pace for 389,000 for the year, ahead of the 385,000 predicted in a survey of 75 economists.

New-home sales for the month were the strongest since April 2010, a time when a government tax credit helped promote home sales. The median price for a new home sold in September was $242,000, up 11.7% from a year earlier. Sales rose in all regions except the Midwest, where they plummeted 37.3%, the biggest drop-off since January 1994. New-home purchases rose most in the South (up 16.8%) and in the North (up 16.7%).

Another encouraging sign was housing inventories still remain lean. With the rising sales, unsold new homes fell to 4.5 months’ supply, down from 4.7 months’ supply in August. Completed but unsold new homes reach their lowest level since October 2005. At the end of September, 145,000 unsold new homes were reported on the market.

The increases in new-home sales and construction starts were mirrored in a monthly index of builder sentiment compiled by the National Association of Home Builders/Wells Fargo. That index rose to 41, its highest reading since June 2006 and the sixth consecutive monthly gain. Even so, any reading below 50 shows negative sentiment.

Some major new homebuilders also reported orders were on the upswing. Toll Brothers, the largest builder of luxury homes, reported a year-to-year increase of 57% in quarterly orders through July. Some suppliers, such as Whirlpool North America, also attributed sales gains to the early stages of a housing recovery.

Aiding new home sales was population growth and near-record low mortgage rates. In mid-October, a 30-year fixed rate mortgage averaged 3.37%, just 0.01% above the all-time low rate reached a few weeks earlier, according to Freddie Mac data going back to 1971. The Census Department also notes last year the number of US household rose 2%, to 119.9 million, the largest increase in 10 years.

The Commerce Department’s new-home sales report for September came a week after another encouraging housing report, when the agency reported a 15% jump in new residential construction starts. According to Commerce data, builders began work on new homes and apartments in September set the pace for an annual increase of 872,000 units. Seasonally-adjusted, it was the highest monthly rate since July of 2008.

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