We reported just last month that new home sales were up over 6% in October of this year but news over the holidays from the U.S. Department of Housing and Urban Development is that sales dipped 13.8% from that sexy six percent increase.
In November, we spoke with Danelle Guilbeau of Boulevard Realty in Houston who aptly noted then that she “hope[d] that this is a trend upward, but I will still remain guarded” mostly because of the first time buyer’s tax incentive was extended, causing new distrust by buyers who now believe Realtors cried wolf by insisting sales must be completed before the tax credit incentive expired.
The HUD report also reveled that the median sales price of new homes sold in November was $217,400 with a 7.9 month supply.
Despite the slide, could there be good news in store? Perhaps a pricing adjustment that could cause an upward blip in sales? Perhaps the “we’ll just throw in free upgrades instead of pricing new homes properly” movement will begin to die? Maybe buyers are focusing on purchasing resale homes over new homes? What good can you take from the news of falling new home sales?
Well, to be honest, the good news I take from it is that New Home Builders are going to have to answer to the consumer. The “throwing in upgrades” to dissuade correct pricing has been a thorn in my side for awhile now, and to think that it might finally have to go by the way side is good not only for myself as a Realtor, but for my buyer clients. The days of trying desperately to keep your comps up has passed. If a New Home Builder wants to compete, they are going to need to keep the costs more friendly and somewhat in comparison with resales of existing homes that are only 3-4 years old. My only hope is that in the effort to compete with existing homes, the quality of the new homes don’t suffer.
I think you also need to look at new construction permits issued over a certain period (you pick) to get a forecast on the new home supply in next six months. If they keep the supply low, then they can better control their future price-point.
In my neck of the woods, Fairfield County,CT new home sales are down because no one has been building for the past year! Duh.
Lani, this is a fantastic post! We need this kind of information.
Houstonblogger, I a strongly agree with your point on new home builder. It has been a thorn for me too.