BARRY ROSA – Numbers will drop
The U.S. Census Bureau earlier this week reported that sales of new single-family homes dropped 5 percent last month to their lowest level since January 2005, but some experts on new homes say the findings may not portend a major slowing of the market, at least not in Connecticut.
Among them is David Ornstein, the district manager in Coldwell Banker Residential Brokerage’s Danbury office.
“I don’t know that I’d put much stake in that [report],” said Ornstein.
The Census Bureau’s numbers reflect new-home sales from across the country, but it is hard to compare a state like Florida or Arizona, where new homes are going up quickly, to Connecticut. Ornstein said some parts of the country are seeing new 1,000-home communities being built, but since Connecticut is already so developed, that has not been the trend here.
“We’re not building so many new homes that there aren’t enough people to buy them,” he noted.
The estimates released by the Census Bureau – and the U.S. Department of Housing and Urban Development – said that sales of new single-family homes in January 2006 were at a seasonally adjusted annual rate of 1.23 million. That is 5 percent below the revised December rate of 1.3 million, but is 3.3 percent above the January 2005 estimate of 1.19 million.
In Connecticut, though, if a slowdown occurred in January it was probably due to the weather, Ornstein said. Many potential homebuyers are waiting until the spring to look for homes.
“I know that we’re still really busy,” he said.
Monthly figures, when looked at in isolation, are not necessarily a good barometer of the health of a market, according to Barry Rosa, who is the new homes and land director for Prudential Connecticut Realty.
When using them, other factors must be taken into account. The last months of 2005 and January 2006 may not have been as strong as previous months, but sales have been uncommonly healthy for the past few years.
“For the past year we have had hideously strong numbers,” Rosa said.
The last “normal” years in terms of real estate sales were probably 1998 and 1999, Rosa said, so slightly lower numbers are not indicative of lagging sales. Most experts predict that, in 2006, some benchmarks that have been set in the past few years will not be matched.
“Those numbers are going to start to go down,” he said.
But even if new-home sales were 80 percent to 85 percent of what they were last year, 2006 would still be a phenomenally strong year, Rosa said.
Rosa noticed some slowdown in sales in the first couple of weeks of January, he said, but part of that is a seasonal issue. And Prudential Connecticut has seen the numbers go up since the end of January, he said.
Some experts and much of the media will be “flag-waving” over the Census Bureau information, Rosa said, but it is important to keep the numbers in perspective.
‘Downward Pressure’
Some experts are seeing the numbers as a more significant sign the market is slowing down, however. David Seiders, chief economist at the National Association of Home Builders, told the Associated Press that surveys showed the number of builders who are throwing in amenities for free in order to sell new homes faster has risen to 41 percent.
Seiders predicted that home price gains, which were running around 12 percent last year, will slow to about 6 percent this year.
He told the AP that a lot of this year’s change will reflect less speculative investor activity and more sales spurred by people desiring to live in the homes. “Hopefully, that is all that is developing here,” Seiders said.
The median sales price of new homes has kept rising steadily for the past four years, a trend that continued into 2005.
The median sales price of new houses sold in January 2006 was $238,100; the average sales price was $291,600. The seasonally adjusted estimate of new houses for sale at the end of January was 528,000. That represents a supply of 5.2 months at the current sales rate.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted “real downward pressure on prices over the next few months,” according to the AP. But new Federal Reserve Chairman Ben Bernanke told Congress earlier this month that for now he is looking for a moderate slowdown in the housing industry, not a crash.
