New Home Construction on the Rise!

Sales of new single-family houses in June rose by 8.3 percent to a seasonally adjusted annual rate of 497,000, countering a reported drop in existing home sales, the Census Bureau and HUD reported. June sales rose by 8.3 percent from May’s 459,000 and were 38.1 percent higher than a year ago (360,000), reaching their highest level since 2008. The median sales price of new houses sold in June dipped slightly to $149,700 from $162,000; the average sales price fell $195,000 from $207,000. The seasonally adjusted estimate of new houses for sale at the end of June rose slightly to 161,000, representing just a 3.9-month supply at the current sales rate. “While new home sales for the prior two months were revised slightly lower, June’s pace still topped most estimates,” said Josh Duda of Franklin American Mortgage. “Builders are having a tough time keeping up with demand.” Duda noted although sales for the prior two months were revised down by 38,000 units across the US, both months still show sequential increases, indicating that new home sales are continuing to build momentum. “June’s strong gains in new home sales may allay some concerns that higher rates are undermining the budding housing recovery,” Duda said. Earlier this week, sales of existing homes posted a 1.2 percent drop for June, although economists noted much of the drop-off resulted from a decrease in investor purchases. “The low end of the existing market has been dominated by institutional investors bent on buying up bargain-priced homes and converting them into rental properties,” Duda said. “Most of the desirable existing properties at the low end of the market are now gone, which is good news for home builders. Moreover, the exit of institutional buyers should be good news for first-time buyers, many of which were having difficulty competing with cash offers.”

Local builders like Mark Martin and Morelock Ross have noticed the lack of building lots for spec or custom homes to be built. When the market crashed for home building, land developers quite building subdivisions, therefore leaving a shortage of lots for homes to be built on. Not only is that the issue but Chris Thomas at Liberty Bank states “builders have to but their own lots before building can take place and most home builders do not have that funding capability.”