New home sales have fallen 27% since the April 30 expiration of the federal home-buyer tax credit, according to the results of a survey conducted by John Burns Real Estate Consulting, Irvine, Calif.
Burns, which derived the data from its June survey of home builders, said Tuesday that net sales per community across more than 1,900 communities fell to 1.35 units in May from 1.84 in April. The 1.35-unit rate was the lowest the survey has registered since March of 2009.
"This isn't a crash", said CEO John Burns. "This is exactly what we thought would happen. Many of the home buyers who would have bought in May, purchased in April instead because of the tax credit."
The sales decline has had only a "minor" effect on new-home pricing, Burns said, with most markets showing slight price erosion and some markets, notably in Texas and South Florida, still showing increases.
"Falling mortgage rates, great affordability and positive job growth will build demand back up," Burns said. "The real question has to do with how many distressed homes will be dumped on the market. Those numbers are rising."
Burns vp Jody Kahn, who manages the survey, said the new-home sales numbers from the Commerce Department, due next week, will likely show a larger drop. "There is a good chance that the Census Bureau will report a decline that is even greater than this, as they reported a much bigger increase in April than our survey showed," she said.
Among other findings from the survey:
* The traffic rating in the survey declined and the color commentary reflected concerns over poor quality and lack of urgency in potential buyers.
* Builders indicate they expect their backlogs to drop 22% this month, including a 34% drop in Texas, which is where the biggest declines in sales occurred.
* Starts fell in eight out of 10 regions during May, as builders felt little hurry to start more homes.
Survey participants included 236 home building executives from 88 MSAs that collectively oversee conditions in more than 1,900 communities.