Though the sales of new single-family home sales faltered a bit month-to-month, they retained their strong yearly gains.
For February, new single-family home sales were at an annual rate of 411,000; that’s down 4.6 percent from January, though still 12.3 percent above where new single-family home sales were a year ago.
Positive Developments in New Single-Family Home Sales
Other positive signs in the Census Bureau’s report included:
- Both the average and median sales prices for new single-family homes rose from January to February; average sale price rose 3.2 percent to $313,700, and median sale price rose 17 percent to $264,800.
- The inventory of new single-family homes also remained stable in February at 152,000 active listings, or a supply of 4.4 months; during the housing downturn’s worst period in early 2009, new-home inventory hit an incredible 12.1-months supply in January.
The ‘Distressing Gap’ in Real Estate
Now that the new single-family home inventory has stabilized, sales are expected to grow in the coming months and years, and as Bill McBride pointed out on his Calculated Risk blog, the key stat over that time will be what he calls the “distressing gap,” or the gap between new home sales and existing-home sales.
Following the bursting of the housing bubble and the rise in delinquencies and foreclosures, distressed property sales rose exponentially, carrying the existing-home sales market with it. As a result, while new home sales continue to fall (resulting in the 12.1 months of supply), existing-home sales stayed unnaturally high, as more and more short sales and REO sales were completed (here’s an excellent graph demonstrating the split).
But now, things are different. The REO/short sale markets are quickly drying up thanks to surging investor activity in 2011 and 2012, and new single-family home sales are starting to come back – thus, watch for the distressing gap to close!