The Home Buyer's Korner

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January 28th, 2015

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New Home Sales for November 2014

New Home Sales

Its been more than six years since New Home Sale have risen to their current levels, as reported by the Commerce Department in its December report. Hopefully finishing the year on a strong note will carry forward into 2015 and give new momentum this sector of the housing market.

New Home Sales and more specifically increased 11.6% from November to a seasonally adjusted annual rate of 481,000 and the best showing since June 2008. Many housing analyst had expected New Home Sale to reach 450,000, so it’s welcomed new for those in the construction industry as well as America as a whole. New Home Sale account for only about 10 percent of the large market, but has a much larger impact on America than other sectors. New Home Sales creates job, is a retail stimulus and great tax revenue for our cities.

Even brighter is that figures for October and November were revised up by a combined 11,000 new units sold and in today market every new home sold is a success story.

New Home Sales if often revised and the December numbers have a margin of error of 16.5 percent, so we’ll need to what and see if a new trend is in place. December was warmer than usual across the continental U.S and possibly contributing to the uptick. The cold weather so far could have a negative impact in the January report as it did this time last year, but what is different this time is that interest rates have fallen substantial, while they were on the rise last winter. A 30-year fixed-rate mortgage averaged 3.63% for the week ending Jan. 22, down slightly from the prior week and well below the average 4.39% a year earlier.

A combination of lower mortgage rates and an improving labor market activity appear to have ignited a meaningful pickup in sales, but America still needs desperately to address stagnant wage to create real momentum. Employers are however adding jobs at the fastest pace since before the recession and that could affect the slack rate which would boost average earning. Consumer Sentiment has been higher and we’ll see a new report on consumer confidence this week.

D.R. Horton Inc., the largest U.S. builder, on Monday reported a 35% increase in sales contracts to 7,370 units sold in its fiscal first quarter ended Dec. 31 from a year earlier. Furthermore spokesmen have stated that the sales pace in January has accelerated. Anticipating a strong spring selling season, D.R. Horton ended December with 1,000 more speculative homes on hand than at the same time last year. A speculative home is one that was built without having a home buyer ready to purchase and when home buyer’s break ground on spec homes it’s a real good sign the market is improving. Groundbreakings for single-family homes last month rose the highest level since March 2008, though they remained weak by historical standards, a Commerce Department report said last week.

Recovery in the housing sector has been uneven and underscoring that has been weakness in the existing housing market.  Sales of Existing Homes, which account for roughly 90 percent of all purchases in the U.S., totaled 4.93 million last year and that was down 3.1 percent from 2013, according to a National Association of Realtors report released last week.

The median price of a newly built home stood at $298,100 in December, up from $275,500 a year earlier. 

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