While the economy is certainly far from achieving a full recovery, the Commerce Department is reporting that there are signs that the market recovery is picking up steam. “This evidence can be largely seen in the number of new homes that have been constructed over the past two years,” explains Colorado Realtor Brian Kinkade.
According to the Commerce Department, new single-family home sales reached their highest level in nearly 2 ½ years this past September. More specifically, new home sales grew by 5.7 percent with a seasonally adjusted rate of 389,000. This represents the fastest pace of new home sales since April 2010, at which time sales enjoyed a boost due to the first-time homebuyer tax credit.
Business conditions in the sector also enjoyed a modest boost thanks to an increase in output. This is good news compared to the July-to-September period, during which time the sector had experienced its weakest quarter.
Still, while there is good news to be found, there are still areas that are in great need of improvement. For example, fewer orders from domestic clients and a drop in overseas demand for U.S. goods for the fifth month in a row both serve as indicators that manufacturing was slowing down growth and employment. According to Markit chief economist Christ Williamson, purchasing managers are reporting that export market uncertainty is the driving force behind the ongoing weakness. Factory activity has also experienced a slowdown largely due to fears that Congress will fail to avoid the automatic government spending cuts and tax hikes that are set to take an additional $600 billion out of the economy in 2013.
Despite business concerns regarding the so-called “fiscal cliff,” housing data does not seem to indicate that these concerns have had an effect on the ordinary American. In fact, new home inventory remained at near record lows in September. Nonetheless, some economists are afraid the increase in new construction could cause a ripple in the market If sales do not increase significantly. If it were to continue at September’s sale pace, for example, it would take 4.5 months to sell the new homes on the market. This is down from the 4.7 months required in August. Overall, sales were up last month in three of the four regions, but they dropped significantly in the Midwest where they fell by 37.3 percent.
About The Author – Beth Besecker is a Realtor and contributing author for numerous real estate blogs.