The latest figures released by the federal government show a pleasantly surprising 6.6% rise in sales of new homes in September. The second monthly rise, took total sales to 307,000, which is stronger than the 300,000 analysts predicted, but still nowhere near the 414,000 seen before the government tax credit ended.
Recent figures also showed a 10% rise in existing home sales, both reports seemingly supporting the view by some economists that the housing market will bottom at the end of this year.
“After dropping precipitously following the expiration of the first-time home buyer tax credit, it looks as though new home sales have stabilized,” said Nicholas Tenev, an economist at Barclays Capital. “We expect a gradual recovery over the coming months.”
None the less, new home sales are still 21.5% lower than this time last year. Also, supply is still a big problem; the government estimates that there is 8 months worth of supply on the market, although that is a slight improvement on the 8.6 months predicted in August. According to supply data in September, stock fell 1% on the month, and 19% on the year.
“With little new construction going on, inventories of unsold new homes at least aren’t a problem even with sales at a depressed level, with the number of new homes for sale extending a run of record lows,” said David Greenlaw, an economist at Morgan Stanley.
New home prices recorded a slight rise as well in September, up 1.5% month on month, and up 3.3% year on year. This took the average to $223,800, approximately 30% above the average price of existing homes.
According to analysts, the foreclosure moratorium by some leading lenders, had only a small effect on the housing market in September.
Looking at September, and the data running up to it, this would seem to be one of the most positive periods we have seen in the US housing market. While repossessions still seem a long way from ending, maybe the misery is starting to ease just a little.
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