Sales of new single-family homes are virtually flat, according to data released by the US Commerce Department on 24 June. New home sales declined by 0.6% from April to May, even though spring and early summer are typically the prime home buying seasons. Large regional differences exist: The decline was concentrated in the South (-8.5%), which is the country’s largest housing market. In the US Northeast and Midwest, new home sales posted double-digit increases and the West saw a moderate increase of 1.3%. Nonetheless, the inventory of unsold new homes continues to fall. In May, the number of new homes on sale fell by 2.3% to 292,000 (seasonally adjusted at annual rate), which represents a 10.2-month supply at the current sales pace.
The National Association of Home Builders (NAHB) commented that several factors continue to limit new home sales, mainly consumer concerns about job security and the inability to sell their existing home. The NAHB/Wells Fargo Housing Market Index declined one point to 15 in June. The index, ranging between 0 and 100, is based on a monthly survey of builders about current single-family home sales and sales expectations for the next six months.
On a more positive note, both housing starts and permits rebounded in May 2009 in all regions, according to the latest US Department of Commerce figures. The first-time buyer tax credit and low interest rates have likely played an important role in the three consecutive months of gains in single-family housing starts. The NAHB cautions that the first-time buyer tax credit, which may drive current construction activities, expires at the end of November 2009. Starts and permits also increased in the smaller and more volatile multi-family housing sector.
In the home remodeling market, conditions remain below average. However, the NAHB Remodeling Market Index showed signs of improvement in the first quarter of 2009. Similar to the Housing Market Index, the Remodeling Market Index is based on surveys of professional remodelers on market demand for current and future residential remodeling projects. Current market conditions in the US show overall improvement: indicators for major additions and alterations, minor additions and alterations, and maintenance and repair showed marked increases. The increase suggests the beginning of a recovery in the residential remodeling market.