July 17 2009
SACRAMENTO - The pace of home sales at California new-home communities in May was still below year-ago levels but continued to improve from preceding months, the California Building Industry Association reported today.
The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 26 percent below May 2008, but is improved from the 31 percent decline in the prior month and is the fourth consecutive month of that improvement trend.
During May, 3,019 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 4,094 in May 2008. Sales of single family homes were down by 30 percent, while sales of townhomes and "plexes" - duplexes, triplexes, etc. - were down 24 percent and sales of condominiums were off by 16 percent.
Compared with the same period last year, the median base price of homes sold dropped by 5 percent.
Non-seasonally adjusted total new-home sales were 9 percent higher than levels seen last month. This is an improvement from a year ago when the April-May interval was a decline of 6 percent. While sales volume is still approximately one quarter off year-ago levels, the steadily shrinking year-over-year sales declines suggest the market is stabilizing.
Jonathan Dienhart, Director of Published Research for HWMI, notes the recent month-to-month increases are a positive sign.
"Typically March is the strongest selling month of the year, not May," said Dienhart. "The incremental gains since March are counter to this typical seasonal trend, which suggests the market has found the bottom and is truly stabilizing, albeit slowly. But with the state tax credits for home purchases running out and continued troubles in the broader economy, it is not yet clear that an actual recovery is at hand."
Robert Rivinius, CBIA's President and CEO, agreed, and added that the continued weakness in the new-home market means that policy-makers need to reduce government fees and restrictions - and to stop trying to impose additional barriers.
"State and local governments must remember that we need to be building more new homes and apartments - not less - to meet the demand caused by our steadily growing population. Many communities have actually reduced impact fees in order to accommodate new housing, we must see more of that, and the continuation of the state tax credit will be critical to sustaining the improvements in the marketplace," said Rivinius.
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