After four straight months of declines, new single-family home sales in September were up 5.7 percent from August, an increase from 296,000 units to 316,000 units, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development – but with Halloween upon us, the increase may have more to do with Freddy Krueger than market forces.
Although the increase was above analysts’ projections, a report by the Associated Press’ Derek Kravitz is attributing the data to unnaturally low prices, not a market recovery. Builders, Kravitz writes, have had to compete with foreclosures and short sales, properties with dramatically lower sales costs than new homes; as a result, builders have cut prices to lure potential buyers.
And the data Kravitz cites seems to suggest his hypothesis. The median sales price for new homes was down 3.1 percent to $204,400, which is the lowest since October 2010. Also, the March to August stretch is typically peak home buying season, but with the market as it is, Americans bought the fewest amount of new homes during that period since 1963.
Mitchell Hochberg, the principal of Madden Real Estate Ventures in New York, said in the AP story that the new data suggests that housing is still alive, but not yet recovering.
“Numbers show that while the housing market still has a pulse, it will not be back on its feet until there is significant job growth,” Hochberg said.