December 28th, 2011
Econintersect: Realtor Mag, the official publication of the National Association of Realtors, had some upbeat news for the housing market Tuesday (December 27). The said that several market indicators revealed last week that sales ticked up for both existing homes and new homes. They also cited new home construction “bounces back, soars 9.3%.” In addition they also cited that mortgage rates reached new record lows. It was a short article, but the atmosphere from the page fairly glowed.
From Realtor Mag:
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.
The article gave the source reference CNNMoney. Neither CNN nor Realtor Mag mentioned that the median new home price they quoted was $8,500 (3.8%) less than just one month earlier (October) and $5,500 (2.5%) less than November 2010. The Census Bureau reported that the average new home price dropped from $281,700 in November 2010 to $242,900 a year later (last month). That is an unsettling 28% decline.
The meaning of these numbers could be several, but here are two possiblities:
- A relatively higher number of lower price new homes are being sold this year.
- Builders are offering more aggressive discounting to move inventory going into the slow winter selling season in late 2011.
It is likely that both factors could contribute to the observed numbers. But these are not factors that serve as cheering news for realtors (the NAR’s members) nor would they be likely to encourage additional buyers who are still looking at an unfavorable buy to rent cost ratio. For more complete analysis of the ins and outs of the residential real estate markets, read GEI Analysis articles.