While the pace of sales at California new-home communities continued to remain slow in March, year-over-year sales declines are steadily shrinking, adding to mounting evidence that the bottom of the current housing cycle is near, the California Building Industry Association reported today.
The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that new home sales in March were 49 percent below March 2007. While a significant decline, the drop is an improvement from the year-over-year decline of over 57 percent in February. During March, 3,565 homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 6,954 in March 2007.
Sales of single-family homes dropped by 44 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 40 percent and sales of condominiums were down 66 percent. Compared with the same period last year, the median base price of homes sold was down 12 percent. Non-seasonally adjusted total new-home sales were 12 percent higher than levels seen in February, which is typical as March tends to be one of the strongest months of the year for new home sales. Median base sales prices statewide were just 0.5 percent lower than in February. Jonathan Dienhart, Director of Published Research for HWMI, notes the trend in year-over-year sales percentages could indicate the bottom is near. “
Last year, new-home sales declined from February to March, bucking typical seasonality trends,” Dienhart said. “This year March sales exceeded those of February, which is the expected direction. Additionally, for the third consecutive month the year-over-year decline in new-home sales has shrunk, suggesting the market may be bottoming out.” Dienhart also suggested that while 2008 may be the bottom of the housing market, the path to recovery won’t be immediate. “With challenges in the broader economy, the housing market will likely take longer than expected to start recovery,” he said. “A return to more traditional housing demand drivers means we will need job growth and positive economic trends to see substantial improvements for the building industry.”
Robert Rivinius, CBIA’s President and CEO, said the statistics should send messages to both prospective homebuyers who have been on the fence for the past 18 months and to policy-makers. “As the market decline appears to be coming to an end, it is likely that incentives and further price drops will also be coming to an end. And with inventory levels falling and housing starts at their lowest level since World War II, it is also quite possible that as buyers return to the market we will see prices harden quickly.
