New Home Sales Have Risen to 700,000.
During the height of the housing boom, the U.S. was producing 1.4 million additional new home sales each year. However, during the recession, that figure dropped to 500,000 per year. Today, the figure has risen to 700,000.
David Crowe, chief economist for the National Association of Home Builder stated “From the standpoint of GDP growth, housing has been a plus, growing at two, three, and four times the rate of the rest of the economy in recent quarters.”
“We expect to see price increases moderate in the next few years as we see additional inventory on the market and investors back away as the bargains disappear,” Crowe said.
The growth in household formations is a bright spot aiding the recovery, economists noted during the webinar. During the recession, household formation growth was delayed as young professionals moved back home with their parents or doubled up with roommates.
However, many handicaps still plaque the housing recovery:
Credit conditions are much tighter now, builders are increasingly facing labor shortages, lot supplies are tight, building material prices are rising, and inaccurate appraisals are hurting home sales.” Crowe said. “You can’t charge more than you can get an appraisal for. Even though we are seeing price increases in labor, land, and materials, 36 percent of builders recently said they had lost at least one sale over appraisals coming in below the cost of production.”
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Source: National Association fo Home Builders
