Just a little longer

The Concord Group is predicting that recovery in the national new home sales market will happen at the end of 2012.

“Lagging economic conditions” is the reason given for the prediction. However, the consulting firm noted that reductions in unemployment and distressed inventory of existing homes in key markets is helping fuel improving land markets.

“We believe job growth in 2011-2012 coupled with limited delivery of new lots will create faster absorption and a rapid demand for new home supplies,” TCG noted in its report.

TCG studied demographic, employment and absorption rates in 16 key markets and finds national new home sales recovery—defined as 3-4 sales per month per project and single digit appreciation—will occur in the fourth quarter of 2012. However, recoveries in the land markets are estimated by late 2011 through mid 2012 with full sales recoveries beginning in 2012 through 2013.

“Recovery has been slowed in part due to the drop in new home demand following the expiration of the government’s tax credit, continued economic uncertainty and the competition from distressed inventory,” Richard M. Gollis, principal and co-founder of The Concord Group, said in the statement.

REPORT NOTES
• U.S. new home sales volume in 2010 is projected to reach a record low 360,000 units, down 75% from the 2005 peak.

• U.S. new home pricing is down 1% from 2009, 15% from 2007 peak, with same product pricing down more than 35% from the peak.

• National same product new home sales prices are down 3% year over year and 1% in the recent quarter.