South Orange County Blog from Bob Phillips

As The Supply Of New Homes Grows, So Does The Opportunity For A “Good Deal”

Posted in home affordability, Real estate by southorangecounty on February 25, 2010

The
housing recovery showed particular weakness in the New Homes Sales
category last month — good news for homebuyers around the country.

A “new home” is a home for which there’s no previous owner.

New Home Sales fell 11 percent
from the month prior and posted the fewest units sold in a month since
1963 — the year the government first started tracking New Home Sales
data.

Right now, there are roughly 234,000 new homes for sale nationwide
and, at the current sales pace, it would take 9.1 months to sell them
all. This is nearly 2 months longer than at October 2009’s pace.

The reasons for the spike in supply are varied:
    The original home buyer tax credit expired in November
    Weather conditions were awful in most of the country in January
    Weak employment and consumer confidence continue to hinder big ticket sales
Now,
these might be less-than-optimal developments for the economy as a
whole, but for buyers of new homes, it’s a welcome turn of events. Home
prices are based on supply and demand, after all.

As a result,
this season’s home buyers may be treated to “free” upgrades from home
builders, plus seller concessions and lower sales prices overall.

It’s
all a matter of timing, of course. New Home Sales reports on a 1-month
lag so it’s not necessarily reflective of the current, post-Super Bowl
home buying season. And from market to market, sales activity varies.

That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It’s a favorable time to buy a new OR a resale home.

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