From Associated Press today (as published by the Austin
American-Statesman):
As noted in the article, one month does not make a trend, but a 24%
increase in new home sales (nationwide) from May to June is good news
for many, especially homebuilders with significant investments in the
areas hit hardest by the recession. As I have pointed out
many times, just 5 states have really driven most of the "national"
real estate market news over the past two years -- Michigan (whose
problems really began long before the mortgage meltdown and the
recession), and California, Arizona, Nevada, and Florida (who enjoyed
many years of incredible -- and obviously unsustainable -- market
run-ups before the housing downturn took back huge portions of those
earlier gains.
As always, Austin is experiencing this stage of the downturn and
recovery differently from those always newsworthy areas -- by being
relatively boring.
Compared to the national average of 24% month-to-month increase in new
home sales, Austin's 8% increase seems paltry. On the other
hand, as I pointed out a few weeks ago (Case-Shiller
Improvements In Context), we didn't have as far to come back,
either. Here's a snapshot of two years of new home sales in
the Austin Metro area:
Clearly, sales are down, and June sales (in Austin and elsewhere) are
bolstered somewhat by closings required by the just-expired homebuyer
tax credit program. Third quarter figures will be more
instructive. The sales valley following last year's
tax credit program is clearly visible in December 2009 and January
2010. With that exception, though, monthly volume has been
amazingly stable since April 2009. Builders in Central Texas
have restricted the supply of new homes, which should provide some
cushion against future market softness if it occurs:
An important concern here is a possible shortage in available building
sites (lots) if demand ramps up as quickly as some believe it might in
the coming months. Obviously, a dramatic under-supply could
drive prices up, but so far this local/regional market has remained
relatively stable, as reflected by median new home prices declining
only 8% over the past two years:
The AP article linked at the top of this post notes that the most
important obstacle to a robust housing market at this point is
persistent unemployment. I'll comment on that in a separate
post, but I have written many times about how differently Austin has
experienced that aspect of this recession as well -- at least so far.
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