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Michael Haigh's Blog

By Michael Haigh | Mortgage Broker
or Lender in Burlingame, CA

New Home Inventory Keeps Sinking


New Home Supply Sep 2010 - 2011Home builders continue to sell homes and work through inventory.

According to data from the Census Bureau, the number of new homes sold in September jumped 6 percent from the month prior, beating analyst expectations. On a seasonally-adjusted, annualized basis, buyers nationwide closed on 313,000 newly-built homes last month.

It's the highest reading since April and a major reason why the available number of new homes for sale is shrinking. 

As compared to September 2010, there are 19% fewer homes for sale nationwide. At today's sales pace, the complete new home inventory would be "sold out" in 6.2 months – the quickest sell-out pace since the April 2010 federal home buyer tax credit expiration.

It's no wonder builder confidence is rising.

After averaging 15 through the first 9 months of the year, homebuilder confidence jumped 4 points for October, carried by low mortgage rates and the expectation for a strong winter/spring selling season.

For buyers , this could be construed as a housing market-shifting signal. As builder confidence rises, it becomes more difficult to negotiate for upgrades and price reductions on a new home. "Great deals" get scarce.

Furthermore, it's unlikely that mortgage rates will sustain their current, ultra-low levels into 2012. Rising rates lead to higher housing payments on a month-to-month basis. 

If you're in the market for a newly-built home, in other words, today's homes may represent your best value of the year.

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Comments

By Pat and Steve Pribisko,  Thu Oct 27 2011, 14:32
For new home buyers, make sure you retain a Buyer's Agent to represent you. Many buyers believe that a Buyer's Agent isn't needed for new home construction. There is no difference between a new home or used home purchase. The Builder has a commission built into the purchase. This means that either the new home sales person gets all of the commission or shares it with the Buyer's Agent. The Buyer's Agent represent a buyer's interests & negotiates your contract for you.

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