From Associated Press today (as published by the Austin American-Statesman):
As noted in the article, one month does not make a trend, but a 24% increase in new home sales (nationwide) from May to June is good news for many, especially homebuilders with significant investments in the areas hit hardest by the recession. As I have pointed out many times, just 5 states have really driven most of the “national” real estate market news over the past two years — Michigan (whose problems really began long before the mortgage meltdown and the recession), and California, Arizona, Nevada, and Florida (who enjoyed many years of incredible — and obviously unsustainable — market run-ups before the housing downturn took back huge portions of those earlier gains.
As always, Austin is experiencing this stage of the downturn and recovery differently from those always newsworthy areas — by being relatively boring.
Compared to the national average of 24% month-to-month increase in new home sales, Austin’s 8% increase seems paltry. On the other hand, as I pointed out a few weeks ago (Case-Shiller Improvements In Context), we didn’t have as far to come back, either. Here’s a snapshot of two years of new home sales in the Austin Metro area:
Clearly, sales are down, and June sales (in Austin and elsewhere) are bolstered somewhat by closings required by the just-expired homebuyer tax credit program. Third quarter figures will be more instructive. The sales valley following last year’s tax credit program is clearly visible in December 2009 and January 2010. With that exception, though, monthly volume has been amazingly stable since April 2009. Builders in Central Texas have restricted the supply of new homes, which should provide some cushion against future market softness if it occurs:
An important concern here is a possible shortage in available building sites (lots) if demand ramps up as quickly as some believe it might in the coming months. Obviously, a dramatic under-supply could drive prices up, but so far this local/regional market has remained relatively stable, as reflected by median new home prices declining only 8% over the past two years:
The AP article linked at the top of this post notes that the most important obstacle to a robust housing market at this point is persistent unemployment. I’ll comment on that in a separate post, but I have written many times about how differently Austin has experienced that aspect of this recession as well — at least so far.