Sales of newly built homes rise 5.5% in November from October
New-home sales rose 5.5% in November from the previous month, the second encouraging indication this week that the housing market is showing signs of stability.
The Commerce Department said Thursday that newly built single-family homes sold at a seasonally adjusted annual rate of 290,000 units in November. That was slightly less than what economists polled by Bloomberg News had expected, and sales were 21.2% below November 2009.
The report followed news Wednesday that sales of previously owned homes, which make up the bulk of the U.S. housing market, also improved in November over the previous month.
Many analysts expect housing to remain weak as long as the labor market struggles to add jobs at a significant clip. New homes face the added challenge of competing with a big supply of foreclosures and other so-called distressed properties.
Patrick Newport, an economist with research firm IHS Global Insight, called the report on new-home sales “miserable,” but added that sales should improve if the economy continues to pick up steam next year.
“The near-term sales outlook is not good because single-family housing permits — a measure of demand and a leading indicator — have been flat, near the bottom, the past six months,” Newport said.
“The sales numbers should improve during 2011, though, because the economy is starting to generate new jobs. New jobs will require that new homes be built nearby,” he said.
The median price for all U.S. homes sold in November was $213,000, a 2% decline from November 2009. The seasonally adjusted estimate of new houses for sale at the end of November was 197,000. The government estimates that it would take just over eight months to work through that supply of homes at November’s sales pace.
Bob Jones, chairman of the National Assn. of Home Builders, said one of the major challenges facing builders was constricted lending from banks.
“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,” Jones said. “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.”
The housing market has been weak since the main government stimulus fueling the market — federal tax credits for buyers — expired in April.