WASHINGTON, D.C. – February 24, 2011 – (RealEstateRama) — Sales of newly built, single-family homes declined 12.6 percent to a seasonally adjusted, annual rate of 284,000 units in January, according to newly released figures from the U.S. Commerce Department. The decline largely offsets a big gain in sales activity that was recorded in the previous month due partly to an expiring tax break in California.”While poor weather conditions likely played a part in keeping potential buyers on the sidelines this January, we do expect consumer demand to improve somewhat along with job-market gains heading into the spring buying season,” noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “However, with the already-thin inventory of new homes for sale continuing to decline and the consistent unavailability of construction credit, the question is whether builders will be able to meet the improving demand as it emerges.”
“This latest report shows new-home sales activity returning to a rate that is consistent with the low level of activity seen in the third and fourth quarters of 2010,” said NAHB Chief Economist David Crowe. “Builders are clearly facing a competitive disadvantage with regard to the large inventory of existing homes at a time when they are unable to replenish their own inventories due to a lack of available financing.”
Regionally, new-home sales declined 12.8 percent in the South and 36.5 percent in the West, but gained 54.5 percent from a very low number in the Northeast and rose 17.1 percent in the Midwest this January.
Meanwhile, the inventory of new homes for sale continued to edge downward, by 0.5 percent to 188,000 units in January. This amounts to a 7.9-month supply at the current sales pace.