Builders Slash Prices, New-Home Sales Rise 5.7%
Daily Real Estate News | Thursday, October 27, 2011
After four consecutive months of declines, sales of newly built single-family homes rebounded in September, rising 5.7 percent, the Commerce Department reported this week.
The bump in sales was largely attributed to builders slashing their prices as they try to compete with the swell of ultra-low prices from distressed homes plaguing many markets. The median sales price of new-homes dropped 3.1 percent to $204,400, the lowest median sales price since October 2010.
“Today’s report highlights the gradual improvement in housing market conditions that is becoming evident in certain pockets of the country, as consumers who can surmount very restrictive lending standards to qualify for a favorable mortgage rate seize on this opportunity to buy,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “The latest numbers also reveal that first-time buyers are driving the new-homes market right now, as evidenced by the volume of lower-priced, entry-level homes under contract.”
By region, the largest gains in new-home sales was in the South where sales jumped 11.2 percent, as well as a 9.7 percent rise in the West during September. Meanwhile, the Midwest posted a 12.2 percent drop in new-home sales in September, while the Northeast saw a 4.2 percent drop, the Commerce Department reported.
However, big gains in the South and West helped to offset overall new-home sales in September, rising to a seasonally adjusted annual rate of 313,000 homes — but still less than half of the 700,000 rate that most economists consider healthy for the sector.
The inventory of new homes for sale continued to hold at an all-time record low of 163,000 units in September, a 6.2-month supply at the current sales pace.