Gene J. Puskar, Associated Press
U.S. sales of new homes in 2011 hit record lows
- Article by: JIM BUCHTA
- Star Tribune
- January 26, 2012 - 9:33 PM
New home sales in 2011 were the worst on record for U.S. home builders, dampening optimism that the housing market was poised for an immediate comeback.
The Commerce Department said Thursday that sales fell 2.2 percent in December, falling to annualized rate of 307,000 home sales, the lowest since 1963. The decline followed three consecutive months of strengthening sales and expectations that the final month of 2011 would be positive as well.
"I feel like we're still bouncing along the bottom," said Marv McDaris, president of the Minnesota division of Pulte Homes.
While last year was one of the worst in memory, many Twin Cities-area builders say 2011 was no worse than the previous year. In fact, construction activity last year was slightly better in 2011 than 2010, largely because of an increase in apartment construction, according to data from the Builders Association of the Twin Cities.
Throughout 2011, builders were focused on reducing inventories of homes built toward the end of the housing boom, and the latest listings suggest that they have been largely successful.
At the current sales pace, there's enough inventory in the metro area to last 6.9 months -- a healthy number, said Ryan Jones, manager of the local office of Metrostudy, a national company that tracks new construction trends. He expects construction activity to increase 10 to 15 percent next year as builders gain the confidence to build more models and spec homes.
Sales activity at Pulte was largely on pace with 2010, but there was a noticeable increase in the number of prospective buyers comparing prices and options, McDaris said. And that, he said, is likely to translate into a better spring -- the official home-buying season in the Twin Cities area.
The national decline in sales comes at a time when builders across the country are already under steady pressure to cut prices to compete with rock-bottom prices on foreclosures and short sales. The median price of new houses fell last year fell 12.8 percent to $210,300 compared with 2010, according to the Commerce Department.
On that front, there was good news Thursday. RealtyTrac said that foreclosures represented a smaller share of all home sales during the third quarter, falling from 22 percent during the second quarter to 20 percent in the third. During the third quarter 2010 foreclosures represented 30 percent of all deals, according to RealtyTrac.
Some of the decline can be attributed to a pause in foreclosure proceedings triggered by a re-evaluation of the way foreclosures are processed. In Minnesota foreclosures represented 14 percent of all sales, a slight increase compared with the previous quarter and previous year.
Though there are no local sales numbers to compare with the national report, Curt Christensen, president of the Builders Association of the Twin Cities, is confident that the latest downturn won't become a long-term trend in the Twin Cities, which has always been more stable than the extremes of the coastal markets included in the national report.
"The Midwest doesn't run hand-in-hand with those national reports," he said.
Jim Buchta • 612-673-7376
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