While new home sales numbers were 9% lower in February than they were the year before, John Burns, CEO of John Burns Real Estate Consulting, is emphasizing that the month’s reading is not as bad as it sounds.
“We are comparing year-over-year to sales which were boosted by the federal tax credit,” Burns said in a release today announcing his company’s monthly survey results. “If we can get through the spring coming that close to last year, I would say we are seeing stability in the housing market.”
The numbers exposed a larger than average jump for the month, increasing 26% from January’s numbers, a significant boost over the 12% increase that’s standard between the two months.
Even with such a promising increase, Jody Kahn, vice president at the firm, emphasized that net sales rates, averaging 1.46 per community nationally, are still far below a normal market’s rate of 4.0. However, in her weekly calls with builders, she is seeing some glimmers of hope. “There are a handful of builders who are reporting to me that they are in fact meeting or exceeding that four per month,” Kahn said in a phone call with Builder. “That tells me that there are some folks out there who have found the right value proposition to drive sales.”
And she believes the numbers could be stronger still if banks were more willing to adjust prices to the market’s demands. “Some of the builders have these legacy communities where they obviously can’t change the desirability of their submarket. People are thinking once, twice, and three times about whether they’re willing to go out to these communities where the prices might be more attractive, but they have to weigh in the added expense of commuting,” Kahn said. “I believe many of these builders are restricted by their lenders from cutting the price to where the homes would be able to sell.”
The survey’s results showed slow price declines had taken effect most everywhere compared to January, although Texas and the Northeast remained flat.
Traffic and starts both picked up for the month and finished inventory had decreased by 9%, taking it down to an average of 2.9 units. However, concerns remain about motivating prospective buyers and then qualifying them if they do decide to bite.
Survey results were based on 225 ratings by 197 builders who oversee more than 1,600 communities across 77 markets.
Claire Easley is senior editor, online, for Builder.
Learn more about markets featured in this article: Greenville, SC.