New home sales in January, as estimated by the US Census Bureau and HUD Thursday, were up 9.6 per cent over the December pace, coming in at 468,000 seasonally adjusted annualized rate. This pace is 2.2 per cent higher than the January 2013 measure. The month-supply measure of inventory fell to 4.7, with the count of new homes for sales standing at 184,000. Only 45,000 of those were completed, ready-to-occupy new homes.
The National Association of Realtors (NAR) Pending Home Sales Index, meanwhile, was up marginally January (0.1 per cent) after a 5.8 per cent decline in December. Despite the January reading, the pace of existing home sales has slowed significantly, with the most recent Index down 9 per cent year-over-year. The NAR measure for existing home sales was down 5.1 per cent in January and was 5.1 per cent lower compared to a year prior.
Home Sales, US
The improvements in housing over the last two years are also apparent in the balance sheets of home builders. According to National Association of Home Builders industry surveys, average builder net profit margins (4.9 per cent) in 2012 were higher than prior readings in 2010 (0.5 per cent) and 2008 (-3 per cent) but still lower than 2006 (7.7 per cent).
NAHB survey data indicates tight but improving acquisition, development and construction (AD&C) loan conditions. FDIC data reveal multiple quarters of expansion of the outstanding stock of AD&C loans, but a lending gap persists between the demand for building and available credit.
Rising building material prices represent another challenge for builders. Data from the Bureau of Labor Statistics Producer Price Index showed a significant increase from December to January in gypsum prices (7.4 per cent). Softwood lumber prices moved up modestly in January after softening at the end of 2013. OSB prices firmed slightly after steep declines from early 2013 peaks, said the NAHB’s Eye on Housing blog Thursday.