Home Builders Remain Confident Despite Drop in New Home Sales

Location is Everything in Real Estate

After posting a strong very September, the number of newly-built homes sold nationwide fell a bit in October.

Total units sold on an annual basis dropped by 25,000 from September; supplies of new homes increased 0.7 months. Home supply is back to its rolling, 6-month average of 8.6 months. So, who’s that impact?

Like everything else in real estate, October’s New Home Sales results varied by location.

For example, except for the South, each U.S. region posted a loss. In the South, there was a 3 percent gain. This is statistically significant because more new homes are sold in the South than in all other U.S. regions combined.

In October, the South accounted for 58 percent of all homes sold. Sort of wild.

Best Deals May Come Between Now & the New Year, Don’t Miss Out!

The dip in New Home Sales did not surprise Wall Street. New Home Sales is closely correlated to Housing Starts, and Housing Starts actually fell in July and August. Furthermore, it seems home builders expected the dip and are brushing it off like Jay-Z (sorry, I couldn’t help it…).

In a poll taken 2 weeks ago, builders reported higher confidence in housing, and their respective prospects for the future. Home builder confidence is at its highest point since June.

For buyers in Ankeny , the effects of New Home Sales data are unknown. In a normal environment, falling sales volume and rising home supplies would help shift negotiation leverage away from the seller and toward the buyer, resulting in lower sales prices.

However, in this market, the “sellers” (in this example, home builders) are more confident about housing, and that offsets a buyer’s statistical edge.

With home prices stagnant and mortgage rates rising, therefore, the best “deals” may come between now and the New Year. Get your bags packed. It’s the time to buy.

Also (shameless plug) if you’re looking to purchase a home and need a mortgage, I’d be happy to help out! Just give my office a call at 515-257-6729, or email me. I’d be happy to help!