According to the Census Bureau, the number of new homes sold slid for the fourth straight month in August, easing 2 percent from July. On a seasonally-adjusted, annualized basis, home buyers bought 295,000 newly-built homes last month. August marked the lowest new home sales tally since February. News outlets are jumping on the story, with at least one calling it a “blow” to the housing market.
As usual, they missed the big picture. The number of new homes for sale nationwide fell to 162,000 last month. This is the fewest number of new homes for sale since at least 1993, the first year the Census Bureau tracked such data. Using New Home Sales as a housing market gauge may be misleading. A better metric may be new home supply.
Based on August sales, new home supply is 6.6 months, and the census bureau basis this number on permits, not completed homes. Does anybody want to guess what the average completion time is for a new house? It depends on the house and the area, but it’s really close to 6 months here, so how many homes are really available to close? I checked out the statistics of the new home sales and availability in Franklin, and here is what I found
- 148 new Franklin homes are currently listed in the MLS
- 42 of those homes are completed at this time, or 28 percent
- 16 new Franklin homes sold last month
- the absorbtion rate of new Franklin homes based on this information is a little over 2 months
- The list price to sales price ratio of new Franklin homes sold in August was 99.6 percent
Based on this information, I don’t really see how new home sales could increase significantly, so it’s not really as bad as government numbers would suggest. It also tells buyers that they can forget about saving money by trying to do it alone. It will help you to have an experienced buyers agent in your corner helping you make good decisions, and it won’t cost you a penny.
This post was triggered by an article written by Phillip Cantrell owner of Benchmark realty, and it just goes to show you why we have buyers who are so confused when we tell them the facts. The media doesn’t tell them the whole story.
Search for New Franklin homes here
