One must learn to take the bad news with the good in this life regardless of whether it’s friends, family or finances. In the notoriously fickle realm of real estate, December of 2012 provided an excellent example of that old aphorism.
The bad news was that the sales numbers for new homes dipped in December after a strong performance in November; however, the good news was that the cumulative new home sales numbers for all of 2012 reach its highest plateau since 2009, the U.S. Commerce Department reported Friday.
Crunching the Numbers
As we dig a little bit deeper into Friday’s report from the Commerce Department, we discover that 7.3 percent was the specific amount that sales of new homes fell from November through December of last year. Delve deeper into those numbers and we’ll find out that in order to calculate this percentage, the Commerce Department compared the difference in new-home sales between November’s seasonally adjusted rate of 398,000 and December’s rate of 369,000.
Overall home sales for all of last year jumped to 367,000, an almost 20 percent rise from 2011, the best since 2009, and the first time we’ve seen a yearly gain since 2005. This relatively good news also carries with it a grain-of-salt negativity, in that the 2005 annual gain was primarily due to 2004’s performance as the worst new-home sales year since 1963, the year in which the government started to keep track of this category of the market.
To put this all in perspective, the Associated Press says that most economists consider 700,000 the benchmark for a healthy market.
Gone but not Forgotten
Although the so-called housing bubble appears to have officially burst about five years ago, man first-time home buyers continue to run into mortgage roadblocks, keeping overall sales numbers low.
Even in these days of historically low rates, lenders have correspondingly tightened their qualification standards for credit and raised the average amount generally acceptable for a down payment.
Enthusiasm about the rejuvenation of the housing market is furthered tempered by the fact that new-homes make up only about 20 percent of housing sales; however, even this comes with good news, in that new homes tend to impact the economy to a much larger extent than the rest of the housing market.
The National Association of Homebuilders says that for every completed new home construction project, an average of three jobs are created and a tax revenue of approximately $90,000 is generated.
This is filed under Home Selling.