November 29, 2012

Recent data show slower housing recovery

A third straight month of improvements in housing starts reinforce the view that the housing market is recovering, but Wednesday's new-home sales data indicate that recovery is moving slower than thought previously, NAFCU economists said.

The Commerce Department reported Wednesday that new-home sales in October slowed 0.3 percent to 368,000 units, annualized. NAFCU Research Assistant Doug Christman noted that monthly sales might have grown in October had it not been for Hurricane Sandy. "The monthly pace of sales has slowed noticeably of late, but year-over-year sales in October were up 17.2 percent," he said.

The median new-home price fell from $248,000 to $237,700 in October on a non-seasonally adjusted, monthly basis, but rose 5.7 percent from a year ago. "Pricing continued to improve from last year, influenced in part by low inventories of new homes and declining inventories of distressed homes," Christman said.

Total months of supply of new homes for sale increased from a revised 4.7 months to 4.8 months as sales could not keep pace with inventories. "The number of unsold homes left on the market increased to 147,000 units, but that represents a 7.5 percent decline from a year ago."

Christman said improvement in the job market and low mortgage rates have also supported home sales in recent months.