After receiving a string of good news regarding housing indicators in the past few weeks, the U.S. Census Bureau and HUD recently released statistics that show new-home sales for the year came in at a paltry 302,000 units for 2011.
The number not only represents a decline of 6.2% below 2010 sales, but the figure represents the lowest number of home sales in any one year since the government began tracking home sales nearly 50 years ago.
Furthermore, for December 2011, single-family home sales dropped 2.2%, to 307,000 units on a yearly basis. This falls below the projection of 321,000 units put out by the market analyst firm Briefing.com. Compared to the annual rate of home sales in December 2010– 329,000 units annually, sales actually declined 6.9%.
Another low to hope that the housing market has finally reached bottom, December home values dropped to a median price of $210,300 or 12.8% compared to 2010.
Falling home prices quickly nixes any idea of a market that has reached bottom, which is a key criterion for a housing recovery.
What Housing Indicators Are Really Saying
This latest report runs contrary to a recent series positive numbers, which gave hope to many analysts and economists that the gloom, so prevalent in the housing market over the past several years, had finally lifted and the housing industry made a turn for the better.
For example, the National Association of Realtors numbers showed existing home sales rising for all three months of the fourth quarter in 2011. The U.S. Census Bureau reported increased construction activity for new home.
According to IHS Global Insight housing analyst Pat Newport, the December new-home sales report is not" statistically significant.” However, the numbers concerning construction – housing starts and permits, provides a more precise account of the prevailing housing trend.
Newport goes on to say construction gains in the final months of the year indicate the housing market made have started to move into positive territory.
Nonetheless, the figures recorded for new home sales in the nation represent a historic low for three regions --- the Northeast, South and West. The Midwest is the only area the country not registering a new low for home sales.
A healthy new-home construction industry is crucial for re-energizing the nation's economy, according to the chief economist for the Association of Home Builders David Crowe. Three hundred people go to work for every 100 new homes under construction.
Fifty percent of the jobs exist on actual construction sites. Industries closely associated with home-building, including appliance manufacturing, cabinet building, and carpet mills and other goods and services, account for the other 50%. Crowe’s prediction calls for an 18% increase in new home sales for this year. IHS Global Housing analyst Pat Newport believes the figure will be closer to 15%.