New home market showing strength – new home inventory declines
- Dennis Norman
The new home market continue to shows some life coming back to it which should be encouraging news to investors. This morning the U.S. Department of Commerce released a report showing the sale of New Homes in June were at a seasonally adjusted annual rate of 384,000, an 11% increase from May.
While the sales numbers for June are still down 21.3% from a year ago, it is still a vast improvement from May’s year over year numbers which showed a 33% decline from a year ago.
Median prices for new homes decreased from $221,600 in May to $206,200 for June. Homes in the $150,000 – $299,999 range continue to dominate sales with 56% of the sales for June falling in this price range.
Perhaps the best news in the report is on the inventory of new homes. Inventory declined again to 281,000 homes which represents an 8.8 month supply based upon current sales rate. This is the lowest inventory we have seen in a long time and is a very positive sign to me.
Is it time to run out and buy up a bunch of those residential building lots sitting out there? Hmm….if you have deep enough pockets to sit on the lots for a while, perhaps 2, 3 or even 5 years maybe so. Particularly if you picked established markets and of course buy at a large enough discount to warrant the long holding period.
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