New Home Sales Market Still Weak
New home sales market is still struggling to recover. According to a recent report released by the government, although the new home sales that were drooping down in February have shown an upward trend, they are far from reaching the speculated figures. As per this report, the number of new home sales in March 2007 was 858,000 while in February 2007, it was around 836,000. These sales are 23 percent lower than the sales recorded during the same period in 2006. Compared to 2001, this is only the second time that the sales pace has been at its weakest, as reported by Census Bureau.
As per a survey conducted by Briefing.com, several economists were optimistic that the home sales would be back to normalcy reaching an annual rate of 890,000. According to Mike Larson, who is a real estate analyst at Weiss Research, this slight increase in the sales might be due to a weather effect. Larson does not expect any recovery in the market before 2008. He believes that improved strategies such as lowering prices, offering attractive incentives and most importantly, stopping new home construction can only balance the supply to demand ratio.
According to the report, around 1000 new homes have been constructed and put up for sale. The number of new homes currently available in the market is an eight month supply in comparison with the current demand. According to a survey conducted by National Association of Homebuilders, crisis in the subprime mortgage market is being deemed as the prime cause for a drop in demand. As per this survey, almost 90 percent of homebuilders are offering attractive packages to customers such as paying closing costs in order to increase their sales.
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