Are Existing Homes More Popular Than New Ones? | Realtypin.com
LOS ANGELES, Dec. 6, 2012 /PRNewswire-iReach/ -- It's pretty tough to turn down all of the bells and whistles of a brand new, never-been-lived-in home. However, new home sales numbers are the one dim spot in the housing market's attempts to recover.
So, does that mean that new homes are less popular than existing ones in today's market?
If you go simply by the numbers, you might be inclined to think that! However, it's a little more complicated than that. According to numbers that were just released by the Commerce Department, the number of new homes sold in October was actually lower than the number of new homes sold in September. Those sales figures came as a surprise, because new construction had started picking back up in recent months. The number of permit applications went up in many major metros around the country, and for the first time since 2005, experts were predicting that home construction was actually going to ADD to the nation's economy by the time all was said and done this year. With October's sales numbers incorporated into the mix, the U.S. is now on pace to see 368,000 new homes sold by year's end. That's more than were sold in 2010 and 2011. However, before the housing bubble burst, the record-low for the number of new homes sold around the country was 412,000 (set back in 1982).
How does our recent situation compare to years gone by?
During the peak of the housing boom, there were more than one million new homes sold around the U.S. each year. In fact, in 2005, there were nearly 1.3 million new homes sold. Despite October's slower sales numbers, builders are still moving forward. In fact, builders are breaking ground on new homes at the fastest pace in four years! And, according to a recent study by the National Association of Home Builders/Wells Fargo, builder confidence (or, the way builders feel about the housing market) is at 46. Anything over 50 is considered to be good, but the current score of 46 is the highest we've seen since 2006 – so, at least it's a step in the right direction. Builder confidence is crucial to the new home market. After all, if builders aren't confident about the environment around them, they're not going to take on the risk of breaking ground on homes that they don't think have a chance of selling! That's why new homes have been so much slower to get back up and running than existing homes have been.
Speaking of existing homes, what's going on with them right now?
If new home sales have been the dim spot, existing homes have been the pleasant surprise as of late. According to the National Association of Realtors, the number of existing home sales rose 2.71% in October. Right now, the nation's existing homes are selling at their best levels in five years. The only times we've seen existing homes sell better during the recession is when the federal government offered tax incentives for home purchases. Now, with no kind of tax credit on the table, it's a sign that the housing market could finally be starting to recover. As well as existing homes are performing, though, in order to see true economic recovery, we need to see new home sales perform better. After all, new home sales aren't just important for the housing market. They're also important for the health of the overall economy.
Unlike their existing counterparts, new homes provide jobs. In fact, every new home that gets built provides, on average, three full-time jobs for an entire year – not to mention the extra work each one provides for people "on the side", like electricians, plumbers, and inspectors. Plus, each new home generates about $90,000 in tax revenue. Those are benefits you simply can't get when you buy and sell houses that have already been built and lived in!