SACRAMENTO, CA – July 21, 2010 – (RealEstateRama) — The pace of home sales at California new-home communities struggled through a challenging May after the expiration of a federal tax credit, the California Building Industry Association reported today.
The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 46 percent below May 2009. During May, 1,745 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 3,200 a year earlier. Sales of single-family homes were down by 45 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were off by 37 percent and sales of condominiums were 55 percent lower than a year ago.
While sales were still down, the base price of units sold was a bit higher than a year ago, and slightly higher than last month. Compared with the same period last year, the median base price of homes sold was 5 percent higher than a year ago.
Non-seasonally adjusted total new-home sales were off 21 percent from last month, which is more than historically typical.
Jonathan Dienhart, Director of Published Research for HWMI, noted the figures for May were similar to sales trends across the country.
“With the end of the federal tax credit has come a harsh reality check for housing,” said Dienhart. “Similar to what we saw last year with auto sales and the ‘Cash for Clunkers’ program, there is quite a let down in sales pace after the subsidy ends. Hopefully, like with auto sales, we’ll see some stabilization in new-home purchases in coming months and we can get a better idea of where this market really stands on its own.”
Liz Snow, CBIA’s President and CEO, agreed and added that confidence in the state’s economy and employment outlook must improve before a strong recovery in new-home sales can materialize.
“Unemployment is one of the largest factors weighing on the new-home market as reports show consumers are exercising more caution when it comes to big purchases,” said Snow. “Confidence in job security and the overall economic recovery must be restored before we see any lasting improvement in new-home sales.”
Still, Snow wanted to remind everyone of the state tax credit for purchasers of new-homes and expressed hope that the incentive would help improve new-home sales in the near future.
“As of July 13, the Franchise Tax Board has received over 9,600 applications and reservations for the new-home tax credit,” said Snow. “We hope this is a sign that will point to some more stable numbers in the coming months.”
The California Building Industry Association is a statewide trade association representing thousands of homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. More information is available on the Association’s Web site, www.cbia.org.
Hanley Wood Market Intelligence is the housing industry’s leading provider of rich data and consulting services on residential real estate development and new-home construction and is a division of Hanley Wood, LLC, the premier media company serving housing and construction. More information is available on the company’s Web site, www.hanleywood.com/hwmi or by calling 1-800-639-3777.
Hanley Wood Market Intelligence (HWMI) collects data from new for-sale production subdivisions of 10 units or more on a monthly basis. HWMI Net Sales represent sales contracts signed during the period indicated minus any reported cancellations. Median and Average Prices are based upon the minimum asking price of the plans sold during the period and do not include the cost of any lot/view premiums or upgrades. Because this data is collected monthly and based upon sales contracts that represent future closings, HWMI data is the most forward-looking data source available for new home information in the state of California.
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