More Good News for New Construction Sales
The real estate industry, new and existing homes, is an economic force multiplier. The "Great Recession of 2008 through 2010 started as the Housing Recession. Home Sales Peaked during 2005. Sales Prices peaked during 2006. New home construction, and new home sales, plummeted through 2010. New home sales prices fell. The new home market is an economic multiplier because new construction needs construction workers, financial service workers, and retail workers. new home sales cause a surge in retail sales through the need for new appliances, new electronics, new home and garden material, and new furniture. We have seen declining existing home inventory since 2015, What is happening with the new home sales market as of May 2018.
It was projected that we could see a spike in New Home Sales and a Record May Average Sales Price. The article "May Real Estate Forecast: How High" projected that the units sold should have smashed through the 60,000 level and approached 69,000 units sold this May. We saw units sold ht 65,000 units. This level is up for the eighth straight May. The problem here is that the level is comparable to May 1995. This is nowhere near what it was during May 2005, and that could be a good thing. We saw 120,000 units sold during May 2005.
The Average Sales Price pulled back from the May 2017 record for the month of May. The Average Sales Price during May 2017 was $378,400. The Average Sales Price this May was $368,500. This is one of the lowest average sale prices recorded during the past 12 months. This could be a response by builders to a lack of existing homes. Existing homes tend to have a lower average sales price than new homes. Remember that all real estate is local. Local means city, school district, neighborhood, and style of house or condominium complex matters in the number of units sold and the sales price.
The number of Rolling Units Sold is up from last year. Last year, during May 2017, there were 590,000 units sold during the prior 12 months. This year that value is 637,000. The Current Year data is on-track for between 650,000 and 675,000 units. The current year data is higher than the rolling year data so the new home sales data is expanding.
The New Home Inventory jumped from the April value. The new home inventory was recorded at 298,000 units. This level is comparable to May 2009 as the economy was in decline and comparable to May 2001, prior to the recession. People cannot buy what is not for sale. We have historically been between 300,000 and 400,000 units for sale for the majority of the time between 1975 and 2009.
This was a strong report that was released one week after a strong new construction report for May. This report could point to even stronger new construction jobs creation and worker hiring. The July Jobs report is normally the peak of the non-seasonally adjusted data. The June Jobs Report is what will be released next Friday.
It's the economy.
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