Following three consecutive months of gains, sales of newly built, single-family homes edged down 2.2 percent to a seasonally adjusted annual rate of 307,000 units in December, according to newly released figures from the U.S. Commerce Department.
Just 302,000 new homes were sold in 2011, 6.2 percent below 2010 and the lowest number of annual sales since the government started tracking home sales in 1963, according to estimates released by the Census Bureau and the Department of Housing and Urban Development.
“December’s small decline in new-home sales follows three consecutive months of gains and means the fourth quarter was still stronger than the third,” noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “The bottom line is that, while 2011 was the worst year for new-home sales on record, signs of gradual improvement began to emerge near the end of the year across a growing number of markets. This nascent recovery should continue to gain strength in the year ahead as more buyers take advantage of the very good deals that out there for newly built homes.
“The three-month moving average for new-home sales and numerous other indicators – such as builder confidence, new building activity and the razor-thin inventory of new homes for sale – show that the market is basically holding its own, and no longer moving backwards,” said NAHB Chief Economist David Crowe. “However, many of the same challenges that builders have cited in the past continue to pose obstacles to the market’s advancement, including buyers’ inability to sell an existing home, consumer concerns about job security, and tight credit conditions for both building and buying new homes.”
December’s decline in new-home sales was mostly due to a 10.1 percent dip in the South, which is the nation’s largest housing market. The Midwest posted a more modest decline of 3.7 percent, while the Northeast and West posted substantial gains of 46.7 percent and 9.0 percent, respectively.
The inventory of new homes for sale continued to slide to a new record low of 157,000 units in December, which is a 6.1-month supply at the current sales pace.
NAHB is forecasting that new-home sales will rise 18 percent in 2012.