Wednesday, July 25, 2012

New home sales up 50 percent in U.S. West region

New single-family home sales in the U.S. West rose 50 percent from June 2011 to June 2012, and new home sales have increased in the region, year over year, for five months in a row. With five months of sustained year over year growth, new home sales are experiencing some of the msot sustained growth seen since 2004.   According to today's New Home Sales report, released by the Census Bureau,there were 9,000 new home sales in the Western U.S. during June 2012.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were up from June 2011's 6,000 new homes sold.  Nationwide, sales rose 17.8 percent, rising from 28,000 to 33,000 during the same period.

The first graph shows monthly new home sales totals for each month since 2003.  While new home sales were at a three-year high for the region, they remained down from 2009's recessionary totals.

For the West region:

The second graph shows that new home sales continue to be well below peak levels, although they have begun to slowly move up in recent months. 

New home sales peaked during the spring and summer of 2005 and have generally trended downward since. The number of new houses sold in the United States is down 74 percent since the peak of March 2005, and new home sales in the West have fallen 76 percent since sales peaked in the region during March 2004.

The third graph shows the declines in both US and regional totals in new homes for sale.

The number of new homes for sale has also fallen off considerably. The number of new houses for sale in the West has fallen 77 percent since the total peaked during June 2007, and the same total has fallen 74 percent in the US since the number of new homes for sale peaked in the US during August 2006.

As we see signs of growth in new home sales, the number of new homes being offered for sale continues to decline. This has led to continued declines in inventory.

As a final note, we can also look to the new home inventory. In this case, we calculate inventory by subtracting the number of new home sales in a given month from the number of new homes for sale at the end of the previous month. In the final graph, we see that the inventory is near a ten-year low, and is at 22,000 homes.  This is good news for owners seeking to sell homes since it suggests that fewer new homes are sitting and waiting to be sold, thus diminishing some of the inventory-driven downward pressure on prices. Inventory has also been down in existing home sales, as noted here.

Nationally, the media has noted that national new home sales have declined month over month, but they remain up on the year over year comparisons. In the West region, though, new home sales have been firm this year, and are also up solidly from last year. Of course, last year's numbers were quite small.