Photo: Robert Clark
If January’s total new home sales figures are an early indicator, the US housing market could be in for a weaker-than-expected spring home buying season.
News of January’s downtick in new home sales came not long after a drop in existing home sales was recorded, which has renewed concern from real estate experts on the overall health of the US housing market. That’s according to the listing site Zillow, based on newly released data by the US Census Bureau.
Last week, the results of a survey sponsored by Zillow revealed that passage of the Tax Cuts and Job Act has many real estate experts revising their previous market predictions for 2018.
Nationally, new home sales fell 7.8 percent from December in January to 593,000 units at a seasonally adjusted annual rate (SAAR). This was also down 1 percent from last year at the same time.
The median sales price of a new home was $323,000 in January, up from the $315,200 recorded in January 2017. Over the last year, the average sales price of a new home rose from $357,700 to $382,700 in January.
Meantime, existing home sales fell 3.2 percent from December to 5.38 million units (SAAR) in January — the largest decline in two years, says Zillow. January’s decline was driven by a sharp drop in single-family home sales in the West, “arguably the country’s most supply-constrained region.”
“After the drop in existing home sales last month, additional weakness in new home sales is not what the market wanted or needed to see as we begin thinking about the spring home shopping season,” says Zillow in the digital release.
And with the start of the spring homebuying season just around the corner, Zillow says it doesn’t anticipate a surge in new home sales “anytime soon.”
“Like 2017, 2018 isn’t setting up to be particularly favorable for builders – construction materials and permitting costs are high and rising, labor is tight, and desirable, buildable land is scarce and expensive,” Zillow says.
At most, despite the national need for increased housing supply, we should expect smaller “incremental” progress rather than a rapid rush of new homes for sale, according to Zillow.
Click here to read the entire release.