Mixed Results for U.S. Housing Market
New Home Under Construction in Naples, Florida by Nova Homes of South Florida
Its a mixed bag for the U.S Housing Market. Sales are down slightly, but prices have gone up due in part to low inventory. The Southwest Florida market remains strong.
Despite the drop in new home sales, the housing market remains underpinned by a strong labor market, which is near full employment. But it is being hampered by a shortage of homes, which is driving up prices. Contributing to the dearth of homes on the market, some homeowners are remodeling their houses rather than trading up.
Those renovations are boosting business for home improvement retailers like Lowe’s Companies, which on Wednesday reported a 6.8 percent increase in net sales in the quarter ended Aug. 4. The median price of a new home increased 6.3 percent in July from a year ago to $313,700. In contrast, annual wage growth has struggled to break above 2.5 percent.
Despite the acute housing shortage, builders are struggling to fill the void, citing supply constraints, including labor, land and finance. Last month, 70 percent of the new single family homes sold were either yet to be built or under construction in July.
“New home sales are still concentrated in the higher end of the market,” said Matthew Pointon, an economist at Capital Economics in New York. “Until builders switch their efforts to cheaper starter homes that will limit to degree to which sales can grow.” The inventory of new homes on the market rose 1.5 percent to 276,000 units last month, the highest level since June 2009. Still, new housing stock is less than half of what it was at its zenith during the housing bubble.
At July’s sales pace it would take 5.8 months to clear the supply of houses on the market, almost a two-year high and up from 5.2 months in June.
Nova Homes of South Florida continues to build custom homes in Naples, Marco Island, and Golden Gate Estates, Florida.
Homebuyers can select from 14 model home designs, customize any home, bring in their own floor plan ideas, or they will design the new home from scratch. For more information please call 239. 307.6116 or visit novahomesbuilder.com