Both the national housing market and the overall economy have made major strides in 2012, with improving factors including increased employment opportunities and increased consumer and builder confidence. These and other positive reports regarding housing have contributed to higher sales of new homes throughout the year, even in November, when transactions are often dormant.
Data from the Commerce Department for the month of November shows sales of new homes increased on both a year-over-year and month-over-month basis. When looking at figures from October, transactions were up 4.4 percent, bringing the seasonally adjusted annual rate to 377,000. The department notes this is the strongest sales pace seen in more than two years, looking back to April 2010 when buyers sprung for the investment to qualify for a tax credit offered that tax year.
Property data from last year shows the most recent figures from November are 15.3 percent higher than sales from November 2011. With higher sales, other housing market factors have been able to improve, including home prices, which are projected to continue increasing in 2013.
Sales lower inventory of homes for sale, builders expect increased business
In early 2012, most of the homes sold were either foreclosures or short sales, which were attractive to buyers looking to save money. As the inventory of bank owned properties properties began to shrink, existing but not underwater homes accounted for a large part of sales. With high sales throughout the second and third quarters, new homes have become appealing to buyers.
High affordability provided by mortgage rates in 2012 also had a hand in making higher-priced new properties appealing to those making the investment. According to the Commerce Department, there were only 149,000 new homes for sale at the end of November, which is not far from the record low of 143,000 reported in August this year.
In a recent outlook report, Freddie Mac chief economist Frank Nothaft noted he expects housing to remain affordable in 2013.
"The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive," said Nothaft. "This has been a big change from a year ago, when some analysts worried that the looming 'shadow inventory' would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery."