California New-Home Market Leveling Off, CBIA Says

SACRAMENTO – The pace of home sales at California new-home communities continued to level off in June, the California Building Industry Association reported today.
The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 26 percent below June 2008, the same percentage decline as in the prior month. During June, 2,607 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 3,528 in June 2008. Sales of single family homes were down by 38 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 16 percent and sales of condominiums increased by 9 percent.
Compared with the same period last year, the median base price of homes sold dropped by 5 percent.
Non-seasonally adjusted total new-home sales were 14 percent lower than levels seen last month. This is a typical seasonal interval and similar to the same month-to-month decline seen last year. While sales volume is still approximately one quarter off year-ago levels, the stabilizing year-over-year sales declines suggest we’ll see the market finally get back to even or positive territory at some point this year.
Jonathan Dienhart, Director of Published Research for HWMI, notes the June numbers are slightly less encouraging than prior months.
“We had been seeing year-over-year decline percentages steadily shrink, yet June’s figures are essentially the same as last month so that’s a bit of a stall in the trend,” Dienhart said. “While we expect incremental market improvements should still get us back to the even year-over-year threshold some time in 2009, it will definitely take a longer time to start mounting a significant recovery with home purchase tax credits due to expire and the broader economy continuing to struggle.”
Robert Rivinius, CBIA’s President and CEO, agreed and cited the state new homebuyer tax credit as the catalyst for the improvements, and added that a continuation of the state tax credit will be critical to sustaining these incremental improvements in the marketplace.
“This is still the third highest monthly sales total for the year, with all of the highest monthly totals coming in after the tax credit was enacted,” said Rivinius. “We need to keep this positive momentum going if our state hopes to start climbing out of this recession by year’s end, and we hope lawmakers take note of the success of the new homebuyer tax credit and grant an extension when they return to wrap up this year’s legislative session. The tax credit has proven to generate new-home sales, and in turn job generating new-home construction, and getting an extension would go a long way towards putting more people back to work and reinvigorating the overall economy.”