New Home Sales up 4.7% in February
337,000 single-family home units sold in the month of February creating a 4.7 percent rise over new home sales in January, according to the U.S. Commerce Department. The news offered a glimmer of hope for the housing sector even though new home sales year-over-year are down 41.1 percent.
It appears that home builders have managed to compete (somewhat) with the growing number of foreclosed homes flooding the market, though few builders are breathing a sigh of relief.
One builder – KB Home, a Los Angeles-based company – reported its first gain since 2005. KB Home sold 1,827 single-family home units in the first quarter, a gain of 26 percent. Lennar, a Miami-based builder, wasn’t as fortunate.
Lennar Corp. reported an annual net loss of $155.9 million. Lennar’s accounting period ended on February 28 and they reported a 44 percent decline of $593.1 million year-over-year. According to a recent report from Bloomberg, Lennar wrote down $10.2 million for 1,100 home sites the company no longer intends to develop homes on, and that new home orders dropped 28 percent.
“Interest rates are at an historical low and have been falling,” said Stuart Miller, Lennar Chief Executive Officer. “Lower rates together with seasonal trends have clearly moved sales higher in the past few weeks.”
This is a trend that was documented in the March 17 U.S Commerce Department report, where it stated that housing starts rose during the month of February for the first time in eight months; an annual rate of 583,000 new homes.
Unfortunately for many builders, the median sales price of a new home slumped by 18 percent in February over the previous year. The median price of existing homes also declined by 12 percent, this includes foreclosed homes, which is bad news for builders.
So where does the Obama Administration’s loan modification program come into play?
According to the plan, $275 billion under the TARP II economic stimulus package is pledged towards preventing as many as 9 million borrowers from losing their homes to foreclosure. The money is to strengthen lending giants Fannie Mae and Freddie Mac. In addition, an $8,000 tax credit for first-time homebuyers is intended to help motivate the housing sector.
Sounds like music to a home builder’s ears, right? However, news of this plan was announced just over a month ago on February 18, meaning that it is still too early to judge whether this will be enough to stimulate the housing market towards recovery.
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Good news, President Obama economic packet is starting to show that he is on the right way with your country. This weekend is he over her in Europe and meets the G20. I hope he can get them to understanding that they have to do something also for the people about mortgage and jobs.
Great article dear.it is a good news for us.thanks to sharing this informative news.i am supporter of obama.i like this post.keep it up dear.
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This is an indicator that buyers are responding to the lower prices, interest rates, and builder incentives.
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New home sales are picking up, with 3 more sales over the week-end at our Mahogany development in San Diego.
@Brookfield – I am glad things are picking up around the state! I stopped and can see why people are buying purchasing homes at Mahogany! Thanks for stopping by
Great post! U.S. Commerce Department Reports are nice which according to the plan, $275 billion.
Finally some good news from the new housing market. I feel sorry for Lennar.. I know they have been one of the largest builders affected by the defective Chinese drywall in Florida, which isn’t helping…
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If the Obama plan can keep more homeowners in their homes rather than losing their homes to foreclosure, it will stem the tide of more and more foreclosures coming onto the market which only adds to the excessive inventory the market has to absorb in order to see a more balanced market. If inventory is held in check, rates continue to be at historic lows, the $8K tax credit is publicized so buyers actually know about it, and the economy doesn’t continue to tank, we may have a fighting chance of keeping prices from plummeting any further. Once we have a few months of steady rather than declining sales and prices, more and more people will dip their toes back into the housing market and we will slowly but surely start to see it recover.
This is great news! I’m a little dissapointed they curtailed the $8k credit back. It was supposed to be $15k originally, which would have been even better probably. I’m excited to finally see some good news though about housing.
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We are seeing the same thing here locally. I think people are responding to the low prices and interest rates. I know it is very local, but I think some markets are ready to rebound starting this year.
Yes of course the same situation is recorded all over the world. Hopefully the housing market recover itself as soon as possible.
Hi,
Nice information.
Informative and simple to understand.
I think this report is different from normal information.
Thanks for sharing.