September New Home Sales Rise
Good News! September saw new home sales rose a whopping 21% YOY, with a 19% higher average sales rate and 2% more communities.
- Builders averages 2.34 sales per community nationally, which is on par with the September sales rates in 2012 and 2013 – the best in the recovery so far.
- With an easy comp to last September, all regions are enjoying YOY sales gains.
- Lower mortgage rates have clearly helped.
- Price declines were surprisingly high, contributing to the pickup in sales. 11s% of builders dropped prices month over month nationally, and 31% dropped price in California.
- Cancellations remain at normal seasonal levels.
- Builder optimism returned, with strong expectations for Q4 and Q1 sales.
Starts rose 7% YOY, representing a 2nd consecutive month of growth.
- Unsold inventory averages 1.8 homes per community, flat YOY.
- Builders started 2.39 homes per community on average in anticipation of improving sales and planning for year-end
Real Estate Developers see Builders’ labor and materials costs increased by 5% YOY nationally, down from 8% one year ago.
The big YOY drop in lumber prices drove much of the deceleration. The average YOY cost increase in 3Q19 only slightly exceeded the YOY price increase nationally.
- Norther California has the biggest gap with 5% higher costs and just 2% higher prices YOY. However, costs have rapidly decelerated from 11% one year ago as new home construction slowed.
- Southern California’s costs dropped to 3.5% YOY from 10% one year ago, while prices are slightly negative.
- Cost pressure increased YOY in 14 of 17 categories, yet framing and drywall costs have decreased on average.
- Labor cost pressure increased YOY in 15 of 17 categories, especially in framing, foundations, and roofing.
In summary, new home sales and starts have picked up dramatically, and expectations for the future are strong. California appears to be the laggard.
Looking for a private loan for new construction or real estate development? Contact Broadmark Real Estate Management today for a quote.