All year, REALTORS have maintained that housing sales volume is being held back by low supplies of homes for sale. But builders may be coming to the rescue.
In October, the Commerce Department says that new single family homes were up 25.4% over September. Year-over-year, new home sales were up nearly 22%.
To meet population needs and replace obsolete homes, new homes must be built at an annual pace of one to 1.5 million homes annually.
But thanks to the slow economic recovery, many home buyers couldn’t afford new homes and some builders couldn’t afford to stay afloat. New home starts dropped to the lowest production rate in decades.
So while the October rate reached 444,000 seasonally-adjusted units, new homes still have a long way to go.
And so do housing sales. According to the Federal Reserve’s Beige Book survey of U.S. regions, housing inventories dropped from a 6.4-month supply in September to nearly five months on hand in October.
So what’s driving sales and keeping housing inventories low?
A variety of reasons — stock market gains, improved consumer confidence, continuing low interest rates, and home prices well below the most recent bubble levels.
And this week, the market got the news it was looking for — unemployment is now down to 7 percent — the lowest rate in five years.
And that bodes well for both new and existing housing sales in 2014.