|Sales of new homes dipped in January but the final quarter of 2011 was stronger than first estimated.|
The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent.
The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year.
Even with more sales, just 304,000 new homes were sold in 2011 -- the fewest on records dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.
Still, the pickup in sales at the end of last year coincides with other improvements in the housing market and should bolster the view that the depressed sector is starting to revive.
Pierre Ellis, an economist at Decision Economics, said the improvement lends "additional support to the housing market," and mirrors other positive signs in the industry.
Builders are growing more optimistic after seeing more people express interest in buying this year. They've also sought more permits to build single-family homes -- one of several encouraging signs across the housing industry.
Sales prices for new homes are rising. The median sales price of a new home rose 0.3 percent in January to $217,100.
In January, sales of previously occupied homes reached their highest level in nearly two years. And they have risen more than 13 percent in the past six months. Mortgage rates have never been lower.
Most importantly, hiring has improved, which is critical to a housing rebound. The economy added more than 200,000 net jobs in both December and January. And economists anticipate another big month of hiring in February after seeing unemployment benefit applications fall to the lowest level in nearly four years. The unemployment rate was 8.3 percent in January, its lowest level in nearly three years.
Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.
Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales -- when lenders accept less for a house than what is owed on the mortgage
Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.