The housing marketing continues to remain tepid at best, which is bad news for the economy, home builders and contractors. The National Association of Home Builders recently announced that the sales of newly built, single-family homes decreased 3.3 percent in February, citing data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
Kevin Kelly, chairman of the NAHB, believes the unusually harsh weather conditions across the country may be playing a role in the smaller number of homes being purchased. According to the research, new-home sales activity declined more than 32 percent in the Northeast, fell 1.5 percent in the South and dropped nearly 16 percent in the West. However, there is still hope for the housing market to turn around. The Midwest boasted an increase of 36.7 percent in February, showing a strong recovery from the previous month.
"We still expect 2014 will be a strong year for housing," said NAHB Chief Economist David Crowe. "The first two-month average of 2014 is exactly in line with where 2013 left off. If not for the unusual weather, we would easily be ahead of last year's pace. We also continue to see household formations and pent-up demand driving sales forward."
The Spring Isn't Starting Off Quite as Planned
While there is a sense of optimism that home sales will improve throughout the year and the inventory of homes has grown to 189,000 units in February, The Wall Street Journal indicated individuals and families are demonstrating a weaker interest in purchasing a new homes. Home sales usually take off in March, but fewer investors are buying this year. With the construction marketplace already struggling, it could mean trouble for home builders throughout the country.
"The spring selling season is off to a weaker start than people in the industry had been expecting or hoping for," Tom Lawler, founder of Lawler Economic & Housing Consulting, told the newspaper.
Buyers are Expected to Come Around
With 440,000 units purchased in February, buyer interest may turn around throughout the year. According to The WSJ, home prices are similar to what they were about 10 years ago, although interest rates are higher. Keeping this in mind, many cities throughout the country may be somewhat affordable to purchase a new home in. These factors show that many home buyers will come around in the near future.
The economy has had a dramatic effect on income growth throughout the country, which has made it difficult for Americans to save up enough money to purchase a new home. However, the number of home construction projects has continued to rise in recent months, demonstrating that a spike in home sales could be right around the corner.
Kelly said that with the inventory of for-sale homes on the rise, a relatively strong buying season isn't out of the picture. This is not only good news for the economy, but also for home builders.