Article brought to you by: Catholic Online (www.catholic.org)

New-home sales hit two-year high in September

By Catholic Online (NEWS CONSORTIUM)
October 24th, 2012
Catholic Online (www.catholic.org)

There appears to be growing signs of a housing market recovery, with new-home sales grew in September the highest level in more than two years. According to a government report released this week, sales sold at an annual rate of 389,000 homes in the month. The last time sales were at this pace, in April of 2010, they were being helped by a short-term home buyer's tax credit.

LOS ANGELES, CA (Catholic Online) - The new home market has been showing steady signs of improvement. The pace of home building hit a four-year high in September. The year-over-year sales improvement in September reached 27.1 percent. It's all part of a broader recovery in real estate, helped by a number of factors all coming together.

Mortgage rates are also near record lows. Mortgages are down as the Federal Reserve decided to buy $40 billion in mortgages to spur greater economic growth. These low rates, coupled with years of weak home sales, have resulted in affordable housing prices.

There has also been a drop in unemployment, a positive development for people looking for mortgage loans.

Adding to the general good news is the fact that foreclosures have fallen to a five-year low, which has reduced the supply of distressed homes available on the market.

"All the housing data has taken a turn for the better," Steven Ricchiuto, chief economist for MSUSA says. "Clearly mortgage rates at such a low level and what appears to be an increase in banks' willingness to make loans has boosted activity off the lows."

New-home sales are a flashpoint for gauging the national economy. This is because new homes require people working in construction to build the homes, as well as spur the purchases of appliances, carpeting and other furnishings.

Investment guru Warren Buffett said in a television interview this week that the recent recovery in housing is one of the factors making him more optimistic about the U.S. economy.

The median price of a new home sold during the month was $242,400, down 3.2 percent from the August reading but up 11.7 percent from a year earlier. The slight decline in the month-over-month price reading was partly due to most of the increased sales coming from the South, a region that has lower prices on average.

The tight supply of new homes on the market has ratcheted up prices. The report showed inventories fell to 4.5 months, the tightest supply of homes since August 2005, near the height of the housing bubble.

However, the actual number of homes available for sale was little changed, with the tighter supply coming from the stronger sales pace.

"Home builders had previously been content to cut the pace of starts back dramatically and well below the pace of sales, thereby letting the level of new-home inventory decline," Michael Gapen, economist with Barclays Capital says. "That inventory levels have stabilized . suggests that home builders are becoming more comfortable carrying these inventory levels."

.

Article brought to you by: Catholic Online (www.catholic.org)