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Friday, November 22, 2013

WSJ: Survey Indicates Weak New Home Sales in October

by Calculated Risk on 11/22/2013 07:28:00 PM

From the WSJ: Weak October Sales Have Home Builders Fretting About Spring

A monthly survey of builders across the U.S. by John Burns Real Estate Consulting, a housing research and advisory firm, has found that respondents’ sales of new homes declined by 8% in October from the September level and by 6% from a year earlier. Last month’s result marked the second consecutive month in which the survey yielded a year-over-year decline in sales volumes, the first dips since early 2011.
“October was basically a crummy month for a lot of builders,” said Jody Kahn, a senior vice president at Irvine, Calif.-based Burns. “Their frustration is about the government shutdown and how it probably trumped any seasonal (sales) lift that builders were hoping to see. Most did not have very good sales.”
“I think this (slowdown) is a good wakeup call for the industry,” Mr. [Scott Laurie, chief executive of The Olson Co] said. “You can’t just raise prices 2% a month. That doesn’t work. What works is affordability.”
New home sales have been weak for a few months. Part of the reason is that builders have been raising prices significantly, and in October the government shut down probably hurt sales too.  Still 2013 has seen a solid increase in new home sales over 2012, and I'm pretty confident new home sales will continue to increase in 2014.