New Home Sales Fall in May
new home sales
The Commerce Department reported today that new home sales fell 0.6 percent in May from April . Most economists had expected a much stronger rate. Also, just as important, the department revised April sales to 344,000, sharply below the 352,000 initially estimated.
On a 12-month basis, May new home sales were off 32.8 percent.
Ian Shepherdson, chief US economist of High Frequency Economics said about this report: “This is disappointing … We thought there was scope for sales to head to the 400,000 mark.”
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5 Comments
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The issue at the core of the recovery is how long it will take to get the number of qualified buyers back. We have lost many homebuyers. All the people in foreclosure can’t buy for at least 3 years because of bank guidelines. Then they will have to save the money too. Plus we have taken some investors out of the market. At what point will new home buyers equal the old foreclosed people is the answer to when the market will come back. My guess is 3 to 5 years.
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It’s a great time to buy rental properties. The pool of renters keeps getting bigger and bigger.
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We have seen several deals fall apart because the appraisal couldn’t find enough deals within a certain window and within a limited area!
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Individual home sellers have fewer profit margins than home builders; so, if a home cannot appraise for a higher value, then a seller might remain put.
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We’ve been through this back in the early 90’s remember. It takes a few years to recover. I see new construction slowing down which will cause less inventory and if they decide to build it will be much smaller and with more density type homes. Over building and putting people into homes they couldn’t afford was our first mistake.
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