It’s the American dream; to own a home, and maybe some property and make it your own. The past decade and a half has borne witness to a rollercoaster ride in the values of homes in many parts of the country.

New home sales sank to a 6-year low by February of 2007, falling to an annualized pace of 848,000 units.
That was down four percent from January of that year. That number also represented an 18.3 percent drop from the year earlier figure. Problems had also showed up in the sub-prime mortgage sector that month with tightening credit.

These figures helped to push the broad stock market indexes lower. Ironically, it had been new home sales in 2004 and 2005 that had helped contribute to a more robust economy those years.

This year has been a real departure from 2007. September saw an annually-adjusted rate of 645,000 units in new home sales. October did not disappoint and sales jumped another 6.2 percent. Septembers sales were already the highest in 10 years. Sales jumped 18.7 percent over year earlier figures. In real numbers, October’s sales represented a seasonally-adjusted rate of 685,000 units.

The strong sales figures are a direct result of a strong job market and historically low mortgage rates. The big jump in sales are also an indicator of consumer confidence, since a home is most people’s largest purchase.

New home sales make up approximately 11 percent of all home sales. The inventory of new homes around the country at the end of October was 4.9 months; the lowest of the year. Seventy-seven percent of that inventory are homes under construction or yet to be constructed. A six-month supply is considered in the industry to be “healthy.”

The northeastern U.S. was the big winner, with sales increasing by 30.2 percent from September to October. The other big winner has been the Midwest, where sales increased 17.9 percent over October.

These figures were followed by the West, which saw in increase of 6.4 percent and the South, where sales were up 1.3 percent.

The increases have been seen three months in a row. This, despite a setback in building activity earlier in the year, because of Hurricanes Irma and Harvey. Milder weather in October helped home sales in October. This factor may have been of particular significance in the Northeast and Midwest.

Larger Budgets

The biggest increases were in high-end homes with values of $750,000 or more. Sales of these more expensive properties increased 400% over a year earlier and represented 7 percent of all new home sales.

The average price of new construction homes increased to $400,000 in October.

Some of the influences that builders are dealing with that dictate the locations of new development are land availability, labor costs and lumber prices.

If corporate tax cuts stimulate the jobs market even more, the sales of new homes may continue to be strong.

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