Sales of New Homes Up, a Hope to End Foreclosure Crisis- By: John Cutts
Current data from the U.S. Census Bureau brought positive news that experts hope would put a stop to the increasing number of homes in foreclosure listings.
February 2009 sales of new homes increased by nearly 5 percent, according to the Census Bureau. The 5 percent increase came unexpectedly as sales of new homes declined to its lowest level in January and homes in foreclosure listings continue to surge.
The seasonally adjusted annual index of new home sales increased by 4.7 percent to 337,000 last month, compared with 322,000 units sold in January.
The increase was greeted with optimism by industry experts who are hoping that it would somehow influence sales of foreclosure listings homes and stabilize the U.S. housing market.
Consensus estimates indicated that economists were expecting new home sales rate of about 300,000.
However, even if the February 2009 new home sales increased compared to January’s record low, home sales rate was still below 41 percent from the same month of the previous year’s 572,000.
This prompted analysts to caution against expecting a long-term market recovery from the growing foreclosure listings homes which is dragging down the housing market.
Moody’s Economy.com economist Andreas Carbaco-Burgos acknowledged that the Census Bureau data is a good sign. However, he said that the development is not enough to reduce the number of homes in foreclosure listings.
He pointed out sales of new homes posted increases several times already for the past years despite overall trend indicating sales declined and foreclosure crisis growing worst.
He said that in order to claim that the housing industry is recovering from foreclosure, the real estate industry needs to have three consecutive months of sales increases.
Meanwhile, the Census Bureau report showed that the average sales price of a new home purchased last month was about $200,900, reflecting a decline of 18 percent from last year’s $245,300. Weiss Research analysts pointed out that the figures were the biggest sales decline in the real estate market history.
Furthermore, the Census Bureau estimated that seasonally adjusted new home sales by the end of last month was 330,000. The report estimated that it would take about a year for the new home market to recover, provided that sales trend would remain on its current pace.
On the other hand, the Commerce Department said that new home construction activity increased by 22 percent last month to 583,00, a significant rise from January’s 477,000.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.