New Home Construction Making a Comeback

After July posted the biggest gain in new-home sales since April of 2010, the pace in August held its own.
chicago new homesAccording to new data released from HUD and the Commerce Department, the sale of new U.S. homes fell a mere 0.3 percent to a seasonally adjusted annual rate of 373,000 units in August. The rate is 27.7 percent above sales seen in August of 2011.
“New-home sales in August effectively tied the pace they set in the previous month, when they were the strongest we’ve seen in more than two years — so this is really a continuation of the good news we’ve been getting on the housing front,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB).
“Looking at the big picture, sales have been trending gradually upward since the middle of last year as favorable interest rates and prices have driven more consumers to get back in the market for a newly built home.”
The region in which Chicago new homes are built saw an improvement as well.
Regional new-home sales in August:

  • Midwest: Rose 1.8 percent
  • Northeast: Rose 20 percent
  • West: Rose 0.9 percent
  • South: Declined 4.9 percent

“This latest report indicates that new-home sales continue to run at a steady pace that’s well ahead of what we were seeing this time last year, and at this rate, the third quarter of 2012 is going to be well ahead of the second quarter,” said NAHB Chief Economist David Crowe.
“That said, the razor-thin inventory of new homes for sale is very concerning because it indicates that builders aren’t able to access the credit they need to build new homes as demand for them improves.”
The inventory of new homes for sale are at a historic low of just 141,000 units. That equates to a 4.5-month supply at the current sales pace. A healthy economy would include six months of inventory.
To see more data, click August new-home sales.