“High levels of home builder confidence, coupled with an insufficient existing housing supply to meet current demand, suggest growth ahead for new home sales this year.” said National Association of Home Builders (NAHB) chairman Dean Mon, a home builder and developer from Shrewsbury, N.J.
Data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau shows that 681,000 new homes were sold in 2019, a number 10.3 percent higher than in 2018. And despite sales of newly-built, single-family homes declining 0.4 percent in December from November, the monthly rate was still 23 percent higher than December of 2018.
“Despite the slow start for housing in 2019, lower mortgage interest rates accelerated new home sales during the second half of the year, marking it as the best year for new home sales since the recession.” said NAHB chief economist Robert Dietz.
The NAHB says a new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed.
Last October, Dietz gave a presentation at a Wood Machinery Manufacturers of American meeting in Boston. He said:
- The new townhouse market is expanding, and Dietz sees this as a real growth market.
- Growth of single-family starts of 2 percent is forecast for 2020 and 2021.
- Multifamily housing starts are expanding in smaller cities. Growth of 1 percent in 2020 and 4 percent in 2021 is forecast.
- Student loans are up sharply, and only 60 percent of students complete a degree within five years. That means that a significant number of people are not graduating but still have debt as much as $30,000 or larger. This is affecting the number of young people who can be first-time homebuyers.
- Housing affordability is an issue in many cities, especially on the West Coast.
- The shortage of labor in construction is also affecting the number of houses that can be built.
2019 home sales differ by region. On a year-to-year-basis data shows new home sales are 10.1 percent higher in the Midwest and 31 percent higher in the West. Sales are down 11.8 percent in the Northeast and 15.4 percent in the South.
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