Underscoring the continued weakness of the nation’s housing market, sales of newly built, single-family homes declined 11.3 percent in November 2009 to a seasonally adjusted annual rate of 355,000 units, according to figures released by the U.S. Commerce Department.
Joe Robson, chairman of the National Association of Home Builders (NAHB), said these numbers “are an indication of the continued fragility of the new-homes market amidst ongoing economic weakness.”
“They also show just how important it was that Congress moved when it did to help spur housing demand by extending and expanding the home-buyer tax credit beyond its November deadline. We hope to start seeing the intended effects of that move on buyer demand in early 2010 as families determine their purchasing plans following the holidays.”
Meanwhile, the number of newly built homes on the market continued to decline in November, falling 2.1 percent to 235,000 units. This marked a 7.9-month supply at the current sales pace.
Despite the sales decline, however, the market saw a nationwide housing production increase of 8.9 percent to a seasonally adjusted annual rate of 574,000 units in November. The gain represented a partial bounce-back from an exceptionally slow month for housing activity in October and was largely attributed to a big increase on the multifamily side.
“The fact that both starts and permits for new housing production rose last month is a good sign that we’re headed in the right direction,” Robson said. “That said, the November improvement was primarily on the multifamily side, and poor job markets and other economic factors are still keeping many potential buyers on the fence for the time being.”
“Home builders remain very cautious about starting new homes, and overall housing production is still down on a three-month average basis,” said David Crowe, NAHB chief economist. “Understandably, it will take some time for the newly extended and expanded home-buyer tax credit to start boosting sales in individual markets—just as it did the last time such an incentive was enacted. However, the fact that permits increased in November is a hopeful indication that the desired impact of the tax credit on housing demand may be forthcoming early in 2010.”
Following the reports of these numbers, the NAHB/Wells Fargo Housing Market Index builder confidence in the market for newly built, single-family homes declined one point to 16 in December.
“Builders are not seeing the full impact of [the favorable market and stimulus programs] on buyer demand, partly because awareness of the latest incentives is still building, and partly because of concerns about job security and other economic woes,” Robson said.
“As we anticipated, this is shaping up to be a bumpy recovery period for the housing market,” Crowe said. “While some families may be just starting to factor the expanded tax credit into their potential home-buying plans, many are hesitating because of the poor economy. At the same time, tight lending conditions for both consumers and home builders continue to pose considerable obstacles on the road to a sustained housing and economic recovery.”