Highest jump in nine years offers hope to a hard-hit industryBy Katy Stech
The Post and Courier
Tuesday, July 28, 2009
The storm clouds could be starting to part over the troubled real estate market.
Realtors, builders and housing experts buzzed over an announcement Monday from U.S. Commerce Department officials that new home sales jumped a surprisingly strong 11 percent last month. That increase beat analysts' expectations and marked the highest jump for newly built homes in nine years.
Signs of improving sales dot the new homes in Ryland's Taylor Plantation in Dorchester County.
Sales for June clocked in at a seasonally adjusted annual rate of 384,000, blowing past the expectations of economists surveyed by Thomson Reuters, who were looking for 360,000.
Historically low interest rates and a federal tax credit for first-time homeowners helped fuel the activity, the government said.
"The worst of the housing recession is now behind us," declared David Resler, chief economist at Nomura Securities.
Monday's data came on the heels of an uplifting report last week from the National Association of Realtors that existing-home sales rose during June, the third month of growth. Sales haven't risen for three straight months since early 2004, during the last housing boom.
Charleston's existing-home sales have yet to reflect a year-over-year increase in 2009, but the pace of the declines has eased in recent months.
While new home sales statistics were not available for the local area, the latest national numbers are providing some welcome relief for the real estate industry, which has been contracting for several years.
Monday's report shows that, slowly but steadily, home buyers across the country are chipping away at the massive supply of empty, newly constructed homes.
"What should follow this is (that) new construction should begin again," said Mary Graham, senior vice president of public policy at the Charleston Metro Chamber of Commerce.
South Carolina's construction industry could use the help. The state Employment Security Commission estimates that the sector lost 10,900 jobs during the past year.
Locally, the supply of new homes surged in 2006 as builders finished properties that they started while demand was still climbing, said Phillip Ford, executive vice president of the Charleston Trident Homebuilders Association.
Many builders slowed when interest fell but continued to sell homes at a respectable pace until last fall, when employers began slashing jobs, the stock market tumbled and lending activity slowed dramatically.
What's revived the new homes sector, experts say, is the $8,000 first-time home buyer tax credit and cheaper pricing.
"One of the things builders have done is they've taken a long, hard look at the market and found a way to build a more affordable product," said Mark Vitner, economist for Charlotte-based Wachovia Corp.
Ford said that custom-built homes, which are typically more expensive, have been slower to sell, likely because there are fewer buyers and it's more difficult to finance big mortgages.
Will Jenkinson, an agent with Carolina One Real Estate's new-home sales division, said sales of newly built houses tend to pick up first following a slump because builders typically have more flexibility to cut prices or offer incentives than sellers of existing residences.
"When you have a builder, it's a business and their emotions about the home are very little," he said. "It's an object. It's a number. They want to get that house to move."
The thri-county area still has a large amount of existing properties for sale. As of Monday, nearly 9,900 homes were listed in the Charleston Trident Association of Realtors' sales database.
And economists warned that tracking new-home sales is only one way to measure economic strength. The nation's unemployment rate still stands at 9.5 percent, household savings have diminished and consumer confidence remains shaky.
"There's only so far home sales can rise when you see income falling and double-digit unemployment (in some states)," Vitner said. South Carolina's jobless rate was 12.1 percent in June.
But even with the bloated inventory, Ford said some local builders are starting to plan for growth again. "Over the last few months is the first time I've had conversations with bigger builders ... (about) people starting to buy some lots and build some houses," he said.
The Associated Press contributed to this report.
Tuesday, July 28, 2009
The storm clouds could be starting to part over the troubled real estate market.
Realtors, builders and housing experts buzzed over an announcement Monday from U.S. Commerce Department officials that new home sales jumped a surprisingly strong 11 percent last month. That increase beat analysts' expectations and marked the highest jump for newly built homes in nine years.
Signs of improving sales dot the new homes in Ryland's Taylor Plantation in Dorchester County.
Sales for June clocked in at a seasonally adjusted annual rate of 384,000, blowing past the expectations of economists surveyed by Thomson Reuters, who were looking for 360,000.
Historically low interest rates and a federal tax credit for first-time homeowners helped fuel the activity, the government said.
"The worst of the housing recession is now behind us," declared David Resler, chief economist at Nomura Securities.
Monday's data came on the heels of an uplifting report last week from the National Association of Realtors that existing-home sales rose during June, the third month of growth. Sales haven't risen for three straight months since early 2004, during the last housing boom.
Charleston's existing-home sales have yet to reflect a year-over-year increase in 2009, but the pace of the declines has eased in recent months.
While new home sales statistics were not available for the local area, the latest national numbers are providing some welcome relief for the real estate industry, which has been contracting for several years.
Monday's report shows that, slowly but steadily, home buyers across the country are chipping away at the massive supply of empty, newly constructed homes.
"What should follow this is (that) new construction should begin again," said Mary Graham, senior vice president of public policy at the Charleston Metro Chamber of Commerce.
South Carolina's construction industry could use the help. The state Employment Security Commission estimates that the sector lost 10,900 jobs during the past year.
Locally, the supply of new homes surged in 2006 as builders finished properties that they started while demand was still climbing, said Phillip Ford, executive vice president of the Charleston Trident Homebuilders Association.
Many builders slowed when interest fell but continued to sell homes at a respectable pace until last fall, when employers began slashing jobs, the stock market tumbled and lending activity slowed dramatically.
What's revived the new homes sector, experts say, is the $8,000 first-time home buyer tax credit and cheaper pricing.
"One of the things builders have done is they've taken a long, hard look at the market and found a way to build a more affordable product," said Mark Vitner, economist for Charlotte-based Wachovia Corp.
Ford said that custom-built homes, which are typically more expensive, have been slower to sell, likely because there are fewer buyers and it's more difficult to finance big mortgages.
Will Jenkinson, an agent with Carolina One Real Estate's new-home sales division, said sales of newly built houses tend to pick up first following a slump because builders typically have more flexibility to cut prices or offer incentives than sellers of existing residences.
"When you have a builder, it's a business and their emotions about the home are very little," he said. "It's an object. It's a number. They want to get that house to move."
The thri-county area still has a large amount of existing properties for sale. As of Monday, nearly 9,900 homes were listed in the Charleston Trident Association of Realtors' sales database.
And economists warned that tracking new-home sales is only one way to measure economic strength. The nation's unemployment rate still stands at 9.5 percent, household savings have diminished and consumer confidence remains shaky.
"There's only so far home sales can rise when you see income falling and double-digit unemployment (in some states)," Vitner said. South Carolina's jobless rate was 12.1 percent in June.
But even with the bloated inventory, Ford said some local builders are starting to plan for growth again. "Over the last few months is the first time I've had conversations with bigger builders ... (about) people starting to buy some lots and build some houses," he said.
The Associated Press contributed to this report.
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