California new-home sales crash eases a bit

SACRAMENTO
June 10, 2009 10:45am

The crashing of home sales at California new-home communities eased in April, although sales were still 31 percent under April 2008, according to figures Wednesday from the California Building Industry Association.

The builders’ lobby notes that April’s performance is an improvement from the 44 percent decline in the prior month and is the third consecutive month of that improvement trend.

Builders are crediting the new-home tax credit that went into effect in March with sparking buyer interest.

The monthly CBIA/Hanley Wood Market Intelligence (HWMI) report shows that during April, 2,771 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 3,989 in April 2008.

Sales of single family homes were down by 32 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 17 percent and sales of condominiums were off by 32 percent.

Compared with the same period last year, the median base price of homes sold dropped by 10 percent.

Non-seasonally adjusted total new home sales were 7 percent higher than levels seen last month. This is an improvement from a year ago when the March-April interval was a decline of 9 percent, the builders note.

While sales volume is still approximately one third off year-ago levels, the steadily shrinking year-over-year sales declines suggest the market is stabilizing, the CBIA says.

“We’re definitely headed in the right direction,” says Jonathan Dienhart, director of published research for HWMI. “Aggressive pricing by builders and tax incentives seem to be helping stabilize the pace of new home sales despite substantial competition from the resale market in the form of foreclosures.”

Robert Rivinius, CBIA’s president and CEO, says the continued month-to-month increase in new-home sales is a clear indication that the state tax credit is having the desired effect in helping to jump-start the housing market.

“Since the state credit went into effect on March 1, more than 8,500 buyers have taken advantage of the program with applications for the credit totaling more than $82.5 million in only three months,” Mr. Rivinius says. “The tax credit is clearly working better than anyone thought – increasing home sales and new construction starts.”