U.S. Sales of New Homes Decline but Home Building Market Inspires Optimism

By Daniel Duffield

Sales of new U.S. homes decreased in December, though the median home sales price increased and the home building industry still seems to contain a fair bit of optimism within the nation’s economic recovery.

According to a statement on Friday made by the Commerce Department, sales declined 7.3% the previous month, reaching a seasonally adjusted 369,000 annual rate, which was well below the estimated 385,000 annual pace.

Government statistics regarding new homes are subject to significant reviews and revisions.

Accordingly, the Commerce Department increased its November sales estimate by 22,000 to a rate of 398,000, this corrected figure being the highest rate since April 2010.

Economic Recovery and Housing in 2012

During 2012, the housing market has been a large indicator of economic recovery, and the gains from this industry have been projected to aid in the compensation of economic damage caused from tax increases.

Median Home prices for new homes increased to $248,900 in December, rising from $245,600 in November, according to data that was not adjusted to account for seasonal trends. These trends across the U.S. of rising home prices demonstrate strength being restored in the housing market and further indicate steps toward housing recovery.

Economists believe that home building stimulated economic growth during 2012 for the first year since 2005, prior to the burst of the U.S. housing bubble burst. This is further evidenced by Friday’s report, the statistics of which indicate that 367,000 new homes were sold in 2012, the most since 2009.

However, this figure represents only a third of new home sales in 2005, during the housing boom before the recession that struck the nation during 2007-09.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.