New Home Sales in 2012 Reach All-Time Low Since 1963
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The number of new home sales in the U.S. hit an all time low since data collection commenced in 1963. This now tallies to six consecutive years of declines in new home sales.
The industry continues to have resistance on two fronts: 1. Ongoing absorption of the over-construction from 2003 to 2006, and; 2. The mega trend of people renting rather than owning. The second category is driven on two fronts. The record number of foreclosures has driven many households to become renters that otherwise would be homeowners. Also impacting that is the preference for recent trade school and college graduates to be renters than owners—a trend that may make them renters for a decade or more given their perception of the outlook of real estate values and their lifestyles.
Normal construction (once the excesses of the housing bubble are absorbed by the market) should tally one million homes a year. See my September 2010 blog detailing that level. We are still probably 30 to 36 months off of heading back into the near one million home sales per year range, and that too will be a function of the level and strength of recovery in employment in the U.S.
I fully anticipate 2012 to post an increase in both the number of price of new homes sales in 2012.
New home prices have now risen for two consecutive years with a median in 2011 of $225,800—up 1.8 percent from 2010 but down 8.9 percent from the peak recorded in 2007.
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