New Data on New Home Sales

As we digest Wednesday’s New Home Sales report, we can get deeper into the issue by looking at our first-hand information in markets all around the country. We do constant research in 84 housing markets in the country, and we network with the major players in those markets. One thing we are seeing is that there are now many “pockets of strength,” even in the hardest-hit markets. There are builders with projects in “A” locations in Phoenix, L.A., South Florida, and other post-bubble markets who are getting very strong sales (sometimes 15-20 a month), and some are actually raising prices and making the increases stick! Buyers are buying in the desirable locations as long as the builder is offering good value in a price range they can afford. But that is not enough. What we need to see is a broad-based recovery of demand. There is not enough depth to the demand yet. We need to go from a small handful of builders and projects who are doing well in these markets to dozens of builders and projects all prospering simultaneously. Our data on aggregate home absorption (measured by user move-ins) showed a big drop between 2006 and 2009, with some slight improvement evident more recently.

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