California New Home Market Conditions Remain Challenging, CBIA Announces
October 15, 2008
SACRAMENTO – Sales at California new-home communities in August continued to move along at a lackluster pace, 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 August were 39 percent below August 2007. The decline was smaller than the 57 percent year-over-year drop seen during July, but August 2007 was a particularly bad month last year, which makes the comparison look less dire.
During August, 2,518 homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 4,102 in August 2007. During the month, sales of single-family homes were off by 41 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 17 percent and sales of condominiums were down by nearly 43 percent.
Non-seasonally adjusted total new home sales in August were 7 percent higher than levels seen in July, whereas the same month-to-month change a year ago was a decline of nearly 25 percent. The median price of homes sold compared to last month was down slightly at $353,175.
Jonathan Dienhart, Director of Published Research for HWMI, notes that many of the factors affecting housing market conditions are macro in scale.
“The broad credit issues affecting lending institutions nationwide mean that all homebuilders and their potential customers face a number of challenges,” Dienhart said. “Until credit markets begin to get back to a more normal level of activity, it will be difficult for the pace of home sales to begin to recover.”
Robert Rivinius, CBIA’s President and CEO, said recent actions at the federal level to restore confidence in the credit markets were welcome, as were the earlier measures to raise conforming loan limits and create a tax credit for first-time homebuyers. But he said the tax credit, which was really in the form of a loan, has apparently had little or no impact on the housing market and the extent of the homebuilding downturn in California requires further reforms.
“Federal, state and local governments need to take quick action to incentivize homebuilding, not to add further costs and barriers,” Rivinius said. “Building fees that often add $50,000 to $100,000 to the cost of every new home or condominium need to be brought in line with today’s market, and we would urge state regulators to keep the economic impacts of the downturn in mind as they craft rules to implement laws designed to curb global warming.”
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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.
