New-home sales registered the worst year on record in 2011, with data going back to 1963, according to information released today by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. An estimated 302,000 new homes were sold during the year, a 6.2% drop from 2010.
Economists had been forecasting a record low for several months, but December’s numbers confirmed expectations with a 2.2% decline from November’s revised rate and a 7.3% drop year-over-year to a seasonally adjusted annual rate of 307,000. (However, the press release included the caveat that December’s estimate was not statistically significant and therefore was likely unchanged from the previous month.)
While new-home sales numbers are published only at the national level, Patrick Newport, U.S. economist at IHS Global Insight, uses single-family permit data to zoom in on how states are faring. "With 11 months of data … single-family permits are on track to set record lows in 15 states," he wrote in a statement today. "Most of these states are in the Northeast and Midwest, where population growth has slowed to a crawl. When the housing market gets back on track, one should expect to see two things take place. One, the proportion of multifamily units built will go up. Two, the proportion of homes built in the South and West will also go up."
Standing inventory of new homes also set a new low with 157,000 units for sale by year’s end. However, slowed buyer traffic caused months’ supply to tick up to a 6.1-month supply, from a 6.0-month supply in November.
But while sales were down, the average price of a new home rose in December to $266,000—the highest level seen since July 2011, although still down 8.8% year-over-year.
Regionally, the Northeast came back strongly from a weak November with a 46.7% monthly improvement, although the region was flat on an annual basis. While the Midwest was down 3.7% for the month, it was the only region to improve year-over-year, with an annual boost of 36.8%. The South was down on a monthly and yearly basis, dropping 10.1% and 4.8%, respectively. And the West was up 9.0% from November but remained 29.1% lower than the previous year.
Going forward, "our reading of the numbers is that the single-family housing market is slowly getting back on track, and that 2012 will be a better year than 2011," Newport wrote.
Claire Easley is a senior editor at Builder.
Learn more about markets featured in this article: Greenville, SC.