US New Home Sales Reach Highest Level Since October 2007
“The Commerce Department said on Tuesday new home sales surged 12.4 percent to a seasonally adjusted annual rate of 654,000 units last month, the highest level since October 2007.” That is the highest level in nearly 9 years.
Favoring by tight labor market, increasing wages, and low interest rates, those number brighten up the housing market outlook. At the same time, lower housing starts put additional pressures on current inventory.
Equity investors turn more bullish on stocks of public home builders. At the time of writing this post, Meritage jumps 3.2% to $35.98, Dr Horton jumps 2.8% to $32.97, KB Homes jumps 4.9% to $16.14, and Lennar jumps 3.2% to $48.07.
Locally here in Orange County and other surrounding counties in Southern California, houses are also selling faster with prices increase in many communities, while inventory of available houses for sale is really tight. Median price of a single family residence jumps 3.9% to $639,000.
“Even as prices rise in many communities, homes are selling faster now than they have in the past several years. This creates a situation where buyers need to move fast in order to secure homes, and they may have to pay more for them. While increasing prices generally coax more selling activity, there has been some hesitancy among potential sellers who worry that they will not be able to buy a desirable and reasonably priced home once they sell.
New Listings were down 5.0 percent for Single Family homes and 3.1 percent for Townhouse-Condo properties. Pending Sales decreased 47.1 percent for Single Family homes and 50.4 percent for Townhouse-Condo properties.
The Median Sales Price was up 3.9 percent to $639,000 for Single Family homes and 6.5 percent to $410,000 for Townhouse-Condo properties. Months Supply of Inventory increased 8.6 percent for Single Family units and 10.3 percent for Townhouse-Condo units. Low housing supply has already prevented an outright national boon in sales activity, despite a continuation of near record-low mortgage rates and an unemployment rate under 5.0 percent deep into 2016.
The issue is not purchasing power. Many areas are falling behind last year’s closed sales totals simply because of lack of available inventory. As this continues, higher prices may put a deeper squeeze on the current buyer pool.”
