Sales of newly-built homes took a small step lower in October. Nonetheless, it still remained strong. According to the Commerce Department, New Home Sales slipped 1,000 units last month, falling to 368,000 units on a seasonally-adjusted, annualized basis.
The final reading fell short of Wall Street expectations. The government likewise revised its initial findings downwards making August and September change by 2,000 units and 20,000 units respectively.
Considering that a “new” home is a home that is considered new construction, the number of new homes for sale nationwide ticked higher to 147,000 which is the highest reading in 9 months.
However, when taking a broader look at October’s New Home Sales report, we see obvious strengths. For example, although home sales slipped last month, it remains the third-highest tally since the April 2010 expiration of the federal home buyer tax credit.
Additionally, the highest reading is 369,000 from last month.
Furthermore, the national new home inventory has dropped off 8% from last year. Fewer homes for sales have been a driving force behind rising home prices. As compared to last year, the median new home price is up by nearly six percent. More demand for buyers is a factor as well.
At the current sales pace, the complete U.S. inventory of new homes for sale would “sell out” in 4.8 months. This is a noteworthy data point because as analysts point out, a 6.0-month supply of homes marks a market in balance.
Today’s new homes market, therefore, is a seller’s market; one in which home builders may be gaining pricing power and negotiation leverage over buyers. It’s one reason why home builder confidence has climbed to a 5-year high.
So for buyers of new construction in Orlando and nationwide, 2013 is a critical year. Home prices may rise and mortgage rates may dotoo. And, along the way, it may get tougher to get a “great deal” on new construction.
At this point we can say that if you’re planning to buy, consider moving up your time frame. After October’s small step backward, the time to buy a newly-built home may be now.