California New Home Market Shows No Improvement
November 21, 2007
SACRAMENTO – The pace of home sales at California new-home communities remained sluggish in September, 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 September were 45 percent below September 2006, similar to the year-over-year decline seen last month. During September, 3,394 homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 6,220 in September 2006. Sales of single family homes dropped by 39 percent, sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 36 percent and sales of condominiums were down 65 percent.
Compared with the same period last year, the median base price of homes sold dropped by 9.7 percent.
Non-seasonally adjusted total new home sales were 1 percent lower than levels seen in August, although it is not unusual for September to show a slower pace of sales activity than August. Median prices statewide were about 5 percent lower than in August.
Jonathan Dienhart, Director of Published Research for HWMI, said the slow pace of sales largely reflects the ongoing credit problems in the mortgage market and lagging consumer confidence.
“The problems relating to credit availability don’t seem like they will be resolving themselves in the near future,” Dienhart said. “Until we have stabilization in the broader market of real estate-backed securities, access to financing will remain restrictive for many potential homebuyers.”
Robert Rivinius, CBIA’s President and CEO, agreed, and said the continued decline in sales should put added pressure on Congress to enact overdue reforms this year to help California homebuyers obtain mortgages.
“In both 2006 and 2007, the House of Representatives has passed by strong bipartisan margins bills to increase Federal Housing Administration (FHA) mortgage limits to make these valuable mortgages more available in California. Unfortunately, the Senate failed to act last year and so far has failed to bring a reform measure to the floor this year as well,” Rivinius said.
“There is still a chance that the Senate will take action in December after the Thanksgiving recess, and we urge senators to pass this and other reforms this year.”
Dienhart notes that beyond credit struggles, consumers are also very wary about home purchasing in general. “Many would-be home buyers have taken themselves out of the market because they see it as too risky, and until this perception improves, we will continue to experience a degree of paralysis in the new and existing home markets.”
The California Building Industry Association is a statewide trade association representing more than 7,000 businesses – homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that homebuilding generates approximately $68 billion a year to the California economy and creates an estimated 487,000 jobs statewide. 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.
