Supply Of New Homes At 6.1 Months Nationwide
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Written on January 31, 2012 by FHA 203K Network Bloggers
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New Home Sales slowed into the New Year, but the market for newly-built homes remains strong. For home buyers, December’s New Home Sales report is yet one more signal that the housing market recovery may be underway.
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According to the Census Bureau, the number of new homes sold in December 2011 slipped 2 percent to 307,000 units on a seasonally-adjusted, annualized basis nationwide.
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A “new home” is a home that is considered new construction; a home for which the buyer will be the first owner and tenant.
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As compared to December 2010, last months’ sales volume fell seven percent. It’s a statistic that suggests housing market weakness. However, in looking at a different component of the New Home Sales report — the supply of homes for sale — we’re forced to reconsider.
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At the current pace of sales, every new home for sale nationwide would be “sold” in a matter of 6.1 months, down from 7 months in December.
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Economists believe that a 6.0-month supply defines a market in balance — anything quicker is termed a “seller’s market”. Statistics like that are enough to create urgency among today’s home buyers.
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Unfortunately, the Census Bureau’s data may be wrong.
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Although December’s New Home Sales report shows sales down 2 percent, the government’s data was published with a ±13.2% margin of error. This means that the actual New Home Sales figure may have been as low as -15.2 percent, or as high as +11.2 percent. And, because the range of possible values includes both positive and negative numbers, the Census Bureau had no choice but to assign its December data “Zero Confidence”.
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It will be a few months before final revisions are made to December New Home Sales data. Until then, therefore, buyers should take cues from the market-at-large and the market-at-large hints at recovery. One example of this is homebuilders showing more confidence in their product than at any time in the last 5 years.
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If your plans for 2012 call for buying new construction, consider using this lull to “make a deal” and reach out to one of the Realtors on fb Home Buyer’s Educational Page to introduce you to the best builders in your area.
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