State home builders mark a new low
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Sales of newly built homes in California slowed in December to a new low point in the current economic cycle, the California Building Industry Assn. reported today.
Just 1,117 new residences were sold in communities with 10 or more units, compared to 2,695 in December 2007, according to the CBIA/Hanley Wood Market Intelligence New Home Sales and Pricing Report. That was 59% below December 2007 sales. The median sales price dropped 16% compared with December last year.
Jonathan Dienhart, director of published research for Hanley Wood Market Intelligence, pointed out in a press release that new homes are competing with foreclosures and distressed properties for buyers.
‘December is always slow for new-home sales,’ Dienhart said, ‘but the problems with credit, consumer confidence and plummeting resale values made it an especially bad month. This should be close to the lowest absolute monthly sales number we see during this downturn, but the next couple of months are not likely to be much better.’
Nationally, builders are seeing more foot traffic, according to a report from the Associated Press:
An increase in the number of prospective home-buyers walking through model homes raised homebuilders’ confidence level this month, but the industry remains pessimistic that new home sales will improve over the next six months, according to a survey released Tuesday. The National Association of Home Builders/Wells Fargo housing market index rose one point to nine in February, after dropping to an all-time low of eight in January. The report reflects a survey of 421 residential developers nationwide, tracking builders’ perceptions of market conditions. Index readings lower than 50 indicate negative sentiment about the market. The index has been below 10 since November, reflecting tougher market conditions and a worsening U.S. economy. But some builders reported an uptick in traffic in recent weeks.
It’s interesting to note that the median base price of new homes sold dropped only 16% December over December, while MDA DataQuick numbers showed sales prices dropping statewide dropping 38.1% for the same period. (The disparity is no doubt due in part to foreclosure sales.) And while new homes didn’t sell well in December, resales were up 47.9% from December 2007, according to MDA DataQuick. New home sales just seem to be running counter to the resale trend, which saw increased sales year-over-year for the last six months.
--Lauren Beale
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