New Home Sales Surge to Highest Level In Five Years
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Recent figures released by HUD and the U.S. Census Bureau show that new home sales in January surged by 15.6 percent to a seasonally adjusted annual rate of 437,000. All regions of the country saw increases, and this sales pace is the highest since July of 2008.
“The surge in demand for new homes this January is an excellent sign that the housing recovery is gaining steam and helping put more people back to work,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
Additional encouraging news for the new home industry and the economy in general is that the amount of inventory homes for sale was at a relatively low 150,000 homes, which at current sales pace would amount to a 4.1 months supply. This is the lowest months supply since March of 2005, with a traditional supply of inventory homes considered to be a six months. Additional starts by builders can be expected, adding additional fuel to the general economic recovery.
With increased demand comes new challenges for home builders, including dwindling lot supplies, spot shortages of skilled labor and rising materials costs. These items are a concern as it could potentially cause a slowing of the housing recovery at a time when building activity is at only half of what is considered normal.
This news comes just after the recent reports showing nationwide increases in home prices for 2012 in the S&P Case-Shiller Home Price Index. Increased sales and increasing prices are a combination that point to 2013 potentially being the year of the real estate recovery.