California New-Home Sales Decline Continued in October
Monthly decrease from 2006 levels similar to that of previous month
December 14, 2007
SACRAMENTO – The pace of home sales at California new-home communities in October continued to be significantly lower than that of a year ago, 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 October were 46 percent below October 2006, similar to the year-over-year decline seen in September. During the month, 3,292 homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 6,047 in October 2006. Sales of single family homes dropped by 37 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 41 percent and sales of condominiums were down 71 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 3 percent lower than levels seen in September, although it is not unusual for October to show a slower pace of sales activity than September. Median base sales prices statewide were just under 1 percent higher than in September.
Jonathan Dienhart, Director of Published Research for HWMI, said the housing market continues to be plagued by credit problems in the mortgage market and homebuyer uncertainty.
“There doesn’t currently seem to be an end in sight in regards to the problems in the mortgage industry,” Dienhart said. “The market must once again find equilibrium; that can only happen when more homebuyers gain access to credit again, and home prices have relaxed to the point where they can still qualify for a mortgage under more strict lending guidelines.”
Robert Rivinius, CBIA’s President and CEO, said it was long past time for the U.S. Senate to pass reforms that would help improve the access to credit in high-cost states such as California by increasing loan limits at the two federally chartered mortgage companies, Fannie Mae and Freddie Mac. He also noted that with the start of next year’s session of the California Legislature just weeks away, lawmakers should celebrate the new year by promoting increased homebuilding and homeownership in 2008.
“As of this week, the latest projections are that the state’s budget next year will be $14 billion in the red – with much of the deficit directly linked to the continued weakness in the housing sector,” Rivinius said. “When they come back to Sacramento in January, lawmakers should remember that promoting new housing and homeownership opportunities for our rapidly growing population is a win for new homeowners and a win for the state budget as well.”
Dienhart said another factor in the slow market is the intangible aspect of consumer behavior. “If potential homebuyers are convinced it’s a bad time to purchase a house, there is only so much that pricing and credit options are going to help. Consumers need to regain their confidence regarding housing before we will see widespread recovery.”
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.
